Aspects of Contract and Negligence for Business - Case Study Example

Aspects of Contract and Negligence for Business Task one: Contract law Every day consumers and sellers enterinto various contracts relating to goods and services offered. However, not all contracts are valid and in case of an invalid contract the neither of the party can claim for any damages resulting from the failure of the contract (Peel & Treitel, 2007). The essence of a contract law enable the court enforces the promises made by each party to contract on each other (Riches & Allen, 2009). A contract can be defined a relationship that subsists between parties intending to be bound legally. A valid contract should have all essential elements which are offer, acceptance, consideration, capacity to contract, privity of the contract and intention to be legally bound (MacMillan & Stone, 2012). A valid contract protects parties against loss due to breach of contract by the other party. This document examines the elements of a contract and how the application of the law in the real situation in a case involving ARBOS (trader) and Ben (buyer). The issue in the case was to determine whether displaying product with a price tag amount to an offer sale of the product. Formation of a contract involves making an "offer by one party and the acceptance by the other party" in accordance to agreed terms (Riches & Allen, 2009). An offer depicts the willingness by one party (offeror) to enter into a legal relationship with another party (offeree) according to particular terms. In case the accepting party decide to change terms of the contract before acceptance that will be tantamount to making a new offer referred as a counter offer (MacMillan & Stone, 2012). The words used in the by the party making an offer determines whether that party had any desire to be bound by the terms and whether the law can construe it as an offer. The law distinguishes an offer from an invitation to treat by defining the latter as a tool to attract a negotiation with hope of making offer (McKendrick, 2010). In the case of ARBOS, who put a television set on the display labelled “special offer” this can be considered as an invitation to treat. The seller was inviting buyers to make an offer for purchase of the television set. The customer willing to purchase the product has to make an offer to but the television by paying the stated price (Peel & Treitel, 2007). Therefore, the ARBOS has no legal obligation to sell the TV to Ben at the stated price. The same could arise where the seller label lower price of the products wrongly. Customers should make an offer to buy the product by paying money (consideration), and the seller can decide to accept the offer or decline it based in the terms of the offer (MacMillan & Stone, 2012). After one party makes an offer the other party should accept the terms unconditionally in order to establish a legally binding agreement (The Law Society, 2014). However, in case the person to who an offer is made introduces fresh terms that amount to counter offer that the party who had made an offer may or may not accept. Therefore, acceptance is meant to affirm the terms of the agreement and bind parties with those terms (MacMillan & Stone, 2012). Acceptance can be in any form including writing, verbal or through conducts of the parties. The parties must enter into a legal agreement and must have the intention to form a legal agreement. For example, minors are limited to form the contract of necessities (Adams, 2014). Also, domestic and social promises such as the promises exchanged between siblings, father and child, husband and wife, etc. cannot result to legal agreements (McKendrick, 2010). Deciding whether a person can form a legal agreement depends on the state of the person at the time of forming a contract. The court may rule in favour of the disadvantaged person in case of disputes by establishing whether one party may have taken advantage of the other. People with mental challenges, bankrupts, convicts, corporations and minors have limitations on the extent to which they can form a legal agreement (Peel & Treitel, 2007). Such persons have not absolute freedom to enter into a legal agreement unless in a limited extent. Consideration is another essential component of a valid agreement. This refers to something of value moving from one party such as money, forbearance, interest, loss, responsibility, etc. which makes the other party to suffer or is undertaken by that other party (Adams, 2014, p. 36). The adequacy of the consideration is not relevant in determining the validity of the contract. However, consideration for documents under seal is not necessary in order to form a binding agreement. For example, in the case between ARBOS and Ben consideration could be the payment of the price by the buyer and handing over of the product by the seller to the buyer. Therefore, no consideration was exchanged between the ARBOS and Ben hence no valid agreement. In the case of FISHER v. BELL.QUEENS BENCH DIVISION [1961] 1 QB 394, [1960] 3 All ER 731, [1960] 3 WLR 351, 59 LGR 93, 125 JP 10, the shopkeeper displayed a knife with a price tag behind it. He was charged under criminal law for sale of dangerous weapons against the prohibitions of the Offensive Weapons Act, 1959 (7 & 8 Eliz. 2 c. 37), s. 1 (1). However, the court found the respondent not guilty and stated that putting products in display with prices attached is an invitation to treat and is not equivalent to offer for sale within the requirements of s. 1 (1) of the Act of 1959. Similar position was held in the case of Partridge v Crittenden in which the court decided that putting goods on the display with prices printed on them should be treated as an invitation to treat. Therefore, ARBOS had invited the potential buyers for negotiation to form a contract by making an offer. ARBOS has the right to accept or reject the offer to sell the television set according to terms of the offer given by the buyer. Therefore, Ben has no valid claim against ARBOS because there was no valid agreement between them. In conclusion, valid legal agreement is established when one party makes an offer to another party who accepts without imposing conditions. The elements such as offer, acceptance, consideration and contractual capacity are essential for a valid contract. The parties should distinguish between offer and invitation to treat in order to determine the time a valid contract comes into force. Task 2: Sale of Goods Contract A contract for the sale of goods protects consumers and buyers against fraud by either of the parties. Consumers are at liberty to establish a contract with traders in the terms which they think are best for them (Adams, 2014). There are various legislations protecting consumers in their deals with traders. However, legislations require consumers to exercise caution in “caveat emptor” or “let the consumer beware” clause in order to avoid suffering loses that could have been avoided by exercising caution (Riches & Allen, 2009, p. 217). Despite the cautionary clause, traders should practice fair deals with consumers because the clause does not apply in all circumstances and the law favours consumers at the expense of traders. This document examines the protection accorded consumers by the law and how it can be applied in the real case involving ARBOS and Carol (consumer). The issue in the case is to establish whether the terms of the contract can protect traders who sell defective products to a buyer who is aware of the defects. The Sale of Goods Act 1979 sets legal mechanism for protecting consumers against unfair practices by the traders. For example, sec. 12 of the Act protects consumers by requiring the seller to transfer good title of the ownership of goods to the buyers. Sec. 13 of the Act requires the sellers to ensure the goods sold to consumers correspond to the narrative provided by the consumer (Adams, 2014). The legislation assumes that traders are experienced in the field of goods they deal with, and consumers can rely on sellers’ expertise to request for the goods of their choice. Sec. 14(2) of the Act deals with quality of goods sold to the consumers. Under Supply and of Goods Act 1994 the traders are required to supply goods of satisfactory quality to the consumers. The goods of satisfactory quality imply the goods must be safe for consumption, durable, free from minor defects, must be fit for the purpose intended by the consumers (Adams, 2014). However, the law does not give protection against normal wear and tear, accidental or abusive damages or the case where he consumer does not want to continue the usage of the product. The goods are of satisfactory quality if they meet the description, price and other considerations disclosed by the consumer (Adams, 2014). Sec. 15 requires the goods sold to the consumers be of the right purpose in accordance to the buyers’ specifications for use. In case the product fail to meet all the requirements set by the Sale of Goods Act the consumer has a right to make a claim to the retailer and not the manufacturer, within reasonable time (The Law Society, 2014). The exact duration depends on the nature of goods and the ease with which the defects can be identified. Once the defect in goods has been proven the buyer can take it to the retailer for repair or replacement. The trader has the option to replace or repair the product within a reasonable time. If a trader is not willing to repair or replace the product consumer can claim for price reduction or claim the amount paid less the charges for the usage so far (Adams, 2014). In the case the retailer is not ready to do that the consumer can look for someone to repair the product and then claim for the cost of repair from the seller. Finally, in case the product has exceeded six months before making claim of fault the buyer has the responsibility to prove that it was faulty and can do that using expert’s report. In the case between ARBOS and Carol the product had a defect at the time of purchase according to the confirmation of the expert. Therefore, Carol can force the retailer to repair or replace the laptop because the good was not of good quality hence not fit for the purpose as required by the Sale of Goods Act (Elliott & Quinn, 2005). Furthermore, the defect was identified within a reasonable time as required by the Act. Concerning the 12 months agreement, I believe Carol was not because it limits her rights provided for in the consumer protection legislations. Task 3: Contractual negligence and Liability in tort Under the law contract the parties to the contract are required to act in accordance to the terms of the contract (Riches & Allen, 2009). In case one party to the contract fails to discharge their duties in accordance to the agreement the injured party can raise a liability claim against the offending party to seek court intervention to compel that party to perform in particular way or compensate for damages and injuries that may have occurred (Crown, 2014). Unlike in contractual liability where the parties bear responsibility for their conducts in accordance the terms of the agreement with the injured party, in tort of negligence a person is held liable for the wrong occurring in non-contractual relationship (Adams, 2014). Because there is no relationship existing between the parties in tort of negligence the liability arises because of the duty of care one party has for the public or neighbour in the normal performance of their duties. Businesses and individuals owe the public or anyone likely to be injured by their actions or negligence a duty of care and are liable for any damage they may cause to others (Adams, 2014). In order for the claimant to successfully raise a claim of negligence against the defendant they must establish the duty of care owed by the defendant to the claimant as required in the case of Blyth v Birmingham Water Works (1856). Also, they should prove that the defendant acted negligently so as to cause the claimant injuries. Furthermore, the injuries caused to the claimant should not be too remote, and there should be a proximate cause of the injury to the defendant. In the case of Barnett v Chelsea and Kensington HMC (1969), the claimant was taken to hospital with the problem of food poisoning and went home after the doctor failed to attend to him and eventually died. The court issued that although the doctor acted negligently by not attending the patient the relationship between death and doctors conduct was of remote cause because the patient was in critical condition and could not be saved anyway. Finally, the damages or loss suffered by the claimant should have been foreseeable in order for the defendant to be held liable for being negligent (Adams, 2014). Therefore, in order to establish a duty of care owned to claimant by the defendant the rules in case of Caparo Industries Plc v. Dickman [1990] 2 A.C. 605, should be applied. These include determining whether a loss to the claimant was foreseeable, whether there was sufficient proximity between the claimant and respondent, and whether it is fair, reasonable and just to enforce the duty of care. In the case involving David and the driver of “Express Lines” the driver had been driving for seven hours although the policy of the company requires him to take a rest after driving for five hours. The bus crashed leaving the claimant with a broken arm. In order for the claimant to successfully sue the defendant, he has to establish the negligence of the driver responsible for the tort (Crown, 2014). The driver was required to take a rest after five hours of continuous driving and since he ignored the rule it can be construed that the driver acted carelessly. Also, the fact that the passenger sustained a broken arm supports liability in tort caused by the driver on the claimant (Riches & Allen, 2009). Furthermore, the damage caused in the claimant was foreseeable because after driving for more than five hours the driver was sleepy and did not want to take a rest. The claimant must establish the proximity of the injury to the defendants conducts (Adams, 2014). Therefore, it is apparent that the driver’s carelessness was the cause of a broken arm of the passenger. Finally, the claimant has to prove that the injuries sustained were sufficient and not remote (Horsey & Rackley, 2013). The arm injuries cost the claimant a loss of revenue for two months in addition to the injuries sustained. Therefore, the driver was tortuous liable for the conducts as result of his negligence. Vicarious liability is a strict liability in tort under common law in which the third party is held responsible for failure to control the conducts of the offender (Adams, 2014). Businesses become vicariously liable for torts committed by their employees on third parties (The Law Society, 2014). The risk is born by the business because the law assumes that it the responsibility of managers to regulate the conducts of their workers and ensure they act responsibly in order to minimize the injuries caused on other people (Adams, 2014). For example, in the case of David and “Express Bus Company,” the business is various liable for the damages caused by the driver on the passengers, pedestrians or other third parties as long as the employee was performing in the normal line of his or her duty. Since the driver of the bus company was performing in the normal line of his duty it irrelevant that the driver ignored the company’s policies requiring him to take a rest after five hours of continuous driving. The court has to determine the employee and employee relationship in order to establish the employers’ responsibility for the employee (Horsey & Rackley, 2013, p.124). This may involve assessing the responsibility of the employer in issuing instructions and payment to workers. Task 4: Occupiers Liability and Contributory Negligence According to Occupier Liability Act 1957 and 1984 the occupier of the land has a duty of care and liable for the damages caused to the lawful visitors and other persons in the premises as a result of breach of duty of care. In order to determine whether one is an occupier of land hence the duty of care they owe the visitors the court examines the degree of control one has on the premises (Horsey & Rackley, 2013). The act uses land to include physical land, buildings, movable vessels such as aircraft, vehicle, etc. The act protects property, personal injury, death, etc. The lawful visitors to whom the Act protects include licensees, invitees, visitors on the virtue of the contract, visitors whose rights are conferred by law, etc. (Bailii, 2010). The common duty of care owned by the occupier to the visitors is to ensure the visitors are reasonably safe during their stay in premises for the purpose for which they were invited in the premise (Bailii, 2010). While providing the duty of care, the occupiers of premises should anticipate children to be less cautious than adults. Also, the persons exercising their calling will appreciate and take caution against any risk related to their occupation. The occupiers of land can discharge their responsibility of care for the visitors by providing sufficient warnings and signs to warn against imminent danger (Riches & Allen, 2009). However, the Occupiers Liability Act 1957 requires the occupiers to provide sufficient warning that can help visitors to take necessary precaution against any risk in order to be discharged or the responsibility for the visitors. However, the occupier has no obligation to give warning against noticeable risks. In the case of Elena and Bell Hotel, Elena was an invitee attending interview. She sustained injuries after falling because of the slippery floor. Under the occupiers liability, she can raise a claim against the hotel for failing to issue sufficient warning regarding the slippery floor (Elliott & Quinn, 2005). The hotel had a duty of care to warn the visitors of the slippery floor in order to help the visitors from getting injuries. The court’s decision in the case of White v Blackmore [1972] 3 WLR 296, affirms that the occupier of premise is liable for the injuries or loss sustained by the visitors in case of unexpected risks. Therefore, Elena can raise a claim against the hotel for acting with negligence. However, the hotel can seek defence against the claim of negligence by arguing that Elena fell due to the effects of drugs hence she was responsible for contributory negligence. The defence of contributory claim a tort action against which the occupier can establish that the harm suffered by the claimant was partly due to the negligence of the negligence of the claimant (The Law Society, 2014). For example, the occupiers of the hotel can argue that Elena was partly to blame for her fall and subsequent injuries she sustained because of taking drugs that may have caused her dizziness leading to loss of balance and eventual fall. The position was held in the case of Revill v Newbery [1996] 2 WLR 239, in which the claimant raised the issue of contributory negligence against a case in which he was accused of injuring the defendant in a criminal offence. The penalty was minimized by 2/3 on the basis contributory negligence by the defendant. References Adams, A. (2014). Law for Business Students. Pearson Education, Limited. Pp. 1- 354. Bailii (2010). British and Irish Legal Information Institute. Available at Barnett v Chelsea and Kensington HMC (1969) Blyth v Birmingham Water Works (1856). Caparo Industries Plc v. Dickman [1990] 2 A.C. 605 Crown, (2014). Office of Fair Trading. Available at Elliott, C. & Quinn, F. (2005). Tort Law. Pearson Longman. Pp.1-384. Horsey, K. & Rackley, E. (2013). Tort Law. UK; Oxford University Press. Pp. 1-618. FISHER v. BELL.QUEENS BENCH DIVISION [1961] 1 QB 394, [1960] 3 All ER 731, [1960] 3 WLR 351, 59 LGR 93, 125 JP 10 Law Society (2014). The law Society Gazette. Available at. http://www.lawgazette.co.uk/ MacMillan, C. Stone, R. (2012). Elements of the Law of Contract. University of London. Pp. 1- 50 Available at. McKendrick, E. (2010). Contract Law: Text, Cases, and Materials. UK: Oxford University Press. Pp. 1-1052. Peel, E. & Treitel, G. H. (2007). Treitel on the Law of Contract. Sweet & Maxwell, Limited. Revill v Newbery [1996] 2 WLR 239 Richard, T.A. (2014). Professional Business Law Essays. Richard TA. Pp. 1-1429 Riches, S. & Allen, V. (2009). Keenan and Riches’ Business Law, (9th Ed.) Pearson Longman. Pp. 1-512. White v Blackmore [1972] 3 WLR 296 Read More