Contracts And Tort Law Assignment
P1.1: Explain the importance of the essential elements required for the formation of a valid contract
A contract may be defined as an agreement between the two parties that involves various stages such as:
- Offer and Acceptance
A contract is an agreement of terms for a certain transaction free of any legal restrictions. Under English Law, The law of contract is based on the principles of Common Law and the decided case known as precedents. The court while adjudicating relies on the precedents, ratio decided and the common practices adopted in the similar situations. Therefore, the parties may pick and decide which terms to be included in the contract or not depending on their needs and convenience. This is known as freedom of contract. But under certain circumstances to protect public interest there have been made certain exceptions to the freedom of contract.
The contracts can me made either in writing or by way of speech. Though, it is recommended to always have a written contract as oppose to the other, to provide evidence and facilitate any claims to be made. However, Certain exceptions are there to this rule as some contracts are needed to be written such as deeds, bill of exchange.
The essential elements to form a contract are discussed as follows:
- Offer and Acceptance: Though an offer, agreement, and a contract are of same nature they still vary in a significant manner. A mere statement of intent would not amount to an offer. A legal contract, binding on both the parties, comes into existence when one party has made an offer and the other party has accepted the same offer. Here the person making the offer is called the offeror and the accepting party is called the offeree. This can be classified as an agreement.
- Intent: Each contract is an agreement but not the other way around. The contracts are only enforceable by law if they are intention lies pure making it legal. Also, The consent to the intention should be free from any fraud or undue influence. Therefore, to decide on the enforce ability of the contract, one must find out the intent of consent of the contract.
- Consideration: It is referred to an amount paid in return or offered for a particular service agreed upon under the contract. It should be an act of acknowledgement of the contract and could be partial or whole. [ Contracts and agreements, 2014 9 Online)]
P1.2- Discuss the impact of different types of contract
As per the prevailing law, there are two types of agreement:
- Domestic Agreements and Social Agreements: According to the law, there is no legal binding agreement amongst members of the family or a friend or acquaintance. The courts presume that these contracts are not intended to be legally binding. However, if the binding nature were expressly mentioned in the contract only then would it be considered a legally binding contract.
Case Law: Balfour V Balfour (1919)
The husband came to England in search of better employment leaving his ill wife back in Ceylon. On leaving he promised to 30 Euros every month. But the marriage ended in divorce making her wife claiming maintenance. The court decided the case in the favor of he husband, as there was no intent of a legal contract. [Lawnix, 2013, 2 K.B. 571 (1919) (online)]
- Commercial Agreements: The presumption by the courts is quite the opposite in case of the commercial agreements. These agreements are entered into with a particular intent of creating a legal binding because of the monetary interests of both the parties. Such agreements include, contracts for the sale and purchase of goods, contracts for services between a provider and receiver of the services, employment contracts. However, if there is an express mention of the not binding legal nature of the contract then the binding nature is removed from the contract.
Case Law: Rose and Frank Co v Crompton Bros (1925)
Under this case, the parties stated in the agreement that it is not a formal or legal agreement and therefore, are not binding legally to either of the parties. The court adjudged the same. [Bailii, 2014, (online)]
P1.3- Analyze terms in contract with reference to their meaning and effect
Every contract has an introductory clause defining the credibility, the information of the parties, current facts and the purpose of their existence. These are known as representations in contractual terms. They do not form a part of the contract and as they don’t specify a common ground of an agreement.
The terms forming a part of a contract are as follows:
- Condition: The most important part of a contract on which the whole contract stands. Any breach by either of the parties would result in the other party to either terminate the contract or proceed with suing for the damages caused.
- Warranty: This term of the contract isn’t as fundamental and therefore the essence of the contract doesn’t get affected as much. Therefore, the injured party does not have a right of terminating the contract for the same. Also, in certain cases, the court has the power to decide whether a term of contract is a condition or a warranty
- Innominate Terms: The courts have begun to recognize a third set of terms known as an innominate term. This means that the rights of either party depend on the circumstances and not just restricted to a condition or a warranty. The rights may differ from situation to situation.
Case Law: Poussard V Spiers & Pond (1876)
Under this case an opera singer had contracted to run an entire season at the producers chambers. Due to an illness the singer couldn’t do the opening night and several nights post that forcing the producers to hire a replacement. The opera singer tried claiming the rest of the season but the producers refused to which court decided that because the opening night was condition of the contract the producers had the right to terminate the same. [Peisker, 2014, (online)]
The manner in which these terms are stated could be two:
- Expressed: As discussed earlier, the terms of a contract can be mentioned in a contract to provide an evidence of the terms agreed upon. The terms that exclusive to the contract and binding on both the parties.
- Implied: These terms are general to all contracts therefore, could be implied even if there is no mention of these terms in the contract. These terms may be implied by the law or may be implied by a custom such as a custom of trade.
Case Law: Hutton V Warren (1836)
In a locality of tenant farmers, one of the farmers had reached his last year of tenancy. It was customary in the locality to claim for the cost of seed and labour from the landowner. However, no express condition like this was mentioned in the agreement.
The court held that the condition was an implied term by customs as it is a general practice has to be complied with regardless of any situation. [Bailii, 2015,  EWHC Exch J61 (online)]
P2.1- Apply the elements of contract in a given business scenarios 1,2, and 3
Business Scenario 1:
Under the given situation, Mrs Kaur, a keen Fine Watches, Pens and Luxury Accessories collector, who had travelled to Manchester to London was disappointed to find that the pen she had come looking for has been cancelled to be auctioned.
However, going into a nearby shop she found the same pen but wasn’t willing to pay as much for the same. She bargained with the shop assistant and asked for some time to thin over the final price being offered to which he agreed not to sell it. When she came back to the shop she found out that the pen had been sold for a higher price than what she was willing to pay.
We can gather from the facts that first, the cancellation was a last moment decision independently taken by the auction organizers. Also, that the auctioneers had made a general announcement to the public to attend the auction for the variety of products and not just one particular product. Such an announcement is referred to as an invitation to treat and not an offer or an agreement. To respond to such an invitation is an offer, to which the auctioneer can reject the offer as he did.
Second, that the fact that the same kind of pen was available and Mrs. Kaur wasn’t able to buy the same holds no relevance to the auction as both the situations are independent of each other. Only Mrs. Kaur’s intention to the treat and offer are not enough as for any transaction to take place the intention should be at both the ends. As there was no agreement of legally binding nature Mrs. Kaur cannot claim any amount of damage.
Case Law: Partridge V Crittenden
The defendant has advertised in the newspaper regarding the sale of wild birds. However, since the sale of wild birds is illegal, the court while looking into the matter decided that the advertisement was an invitation to treat and that no law was broken while doing so. [Oocities, 2015 (online)]
Business Scenario 3:
Mia, a self-employed builder had been promised a certain sum of amounts in exchange of providing certain service to his brother, Hakim and his friend, Jane. However, both of them refused to pay on the completion of the work.
In the given situation, as both the parties in both the contracts had agreed to common terms, had intent, made an offer and the same was accepted by the offeree. It was a valid promise by way of speech. Though a promise isn’t a strong transaction in nature but in this case, the elements being present, Mia can claim the amounts from both the parties as he had done his share of promise with due completion of services asked of him.
P2.2- Apply the law on terms in different contracts using a contract of your choice
For the purposes of this task I choose a Sale of Goods Contract.
A sale of goods contract has the following terms [Translegal, 2015 (online)]:
- Payment– Specification like amount of payment, mode of payment, due date of payment, and other such necessities are mentioned for under this clause. The combinations of the aforementioned conditions in relation with the duration of payments could also be a condition to this clause. For example: if a good is purchased on installment to be paid every 10 days.
- Prices: The prices specified in the contract does the purchaser consenting to the contract owe. Therefore, price to be paid is binding in nature and cannot be avoided under any circumstance.
- Risk of loss: Any contract faces an equal risk of loss by a natural or a man made disaster or situations that are inevitable. This clause however, mentions the events under which the contract would be terminated or partially enforceable. Also, the loss to be compensated on the occurrence of such events.
- Rights and Duties: There are a certain amount of rights and duties attached to any contract and so to this. In a contract to sale of goods, both the buyer and the seller have certain rights and duties to be carried out once they enter into a contract. For example [OPM, 2015 (online)]:
- Rights and Duties of the seller
- A competent price is offered
- The product is duly checked, free from every defaults
- Stopping the goods in transit in case the purchaser becomes insolvent
- Rights and Duties of Purchaser
- The documents and products are inspected before its acceptance
- The payment is made on time and in the manner agreed upon
- Credibility of the parties: The parties at the time of signing the contracts may mention there credit worthiness and goodwill in the market through declaring their financial status. This is done to avoid any terminations in the future.
- Return of goods: It should be expressly mentioned the situations under which the product can be returned and the ones where it cannot be. The due date of returns and the conditions attached to it shall be mentioned as well in order to avoid any confusion later on.
- Remedies: In any circumstance if any of the parties are unable to comply by their duties towards each other the available remedies to them should be stated expressly under the contract. Some remedies are as follows:
- Action against non-delivery
- Action against non-acceptance
- Action for price
- Action for breach of warranty
- Choice of Law and Forum: The parties may agree upon the law to be abided by during the functioning of the contract. In case of any disputes regarding the enforceability of the terms and conditions mentioned under the contract the parties may agree upon the court to be approached under the similar circumstances for the damages and consequences so faced to be followed by both the parties.
P2.3- Evaluate the effect of different terms in given contracts using business scenario 4
Business Scenario 4:
In the given situation, the parties had entered into a written agreement with conditions that were expressly mentioned under the contract. However the employer had certain ideal conditions to the contract, nevertheless the employee had agreed to those conditions making her liable in breach of those conditions.
When a condition is breached by either of the parties would result in the other party to either terminate the contract or proceed with suing for the damages caused.
Under the present situation, the employee had failed to comply with the term of completion of work but the implication that arises here is, what amount of work can be completed within a given period of time depends from person to person. Though she had put in all the hours required she wasn’t able to complete leaving it her with the intent to finish the work but being unable to do so.
Second, that she wore trousers to work which she could have not done as, an intent was missing or must have been an act of negligence which is again inexcusable. This gives the employer enough reason to terminate the contract as he did. The termination of the contract under present circumstances is valid.
P3.1- Contrast liability in tort with contractual liability
Liability in a general sense refers to an act or a service owed by a person towards another with respect to non-fulfillment of a term or a condition. A tortious liability however, arises out of a damage caused due to a wrongful act that cannot be quantified. The wrongdoer must have had done an act in contrast to what was expected out of him and the claimant poses certain damage out of the said act. The compensation to be paid to cover the damages would be considered as a tortious liability. It involves a liability arising out of a general promise applicable to an unlimited and distinct people.
A contractual liability is however, different from a tortious liability as it involves only the parties to the contract in regards with a specific promise. It is quantifiable with respect to the value of harm done in relation with the consideration involved in the contract and the amount of loss can be calculated depending on the terms of the contract.
Case Law: Haley V London Electricity Board (1965)
Under this case the claimant was a blind person and the defendant was an electric company carrying out work on the road that involved digging the hole. On one fine day the blind person while walking by the site fell into the hole. The defendant claimed that the any ordinary person capable of seeing would have seen and avoided the hole because it was so prominent. The judge ruled the case in the favor of the claimant making the defendant liable. The judgment stated that though it was a foreseeable situation the defendant should have known that there might be some blind or physically challenged people present on the road and therefore, should have taken necessary step towards their safety. [A. G. S. Pollock (1964) (online)]
P3.2- Explain the nature of liability in negligence
It is a known phenomenon that any wrongful act that causes damage to the claimant that can’t be quantified, is referred to as an act of tort. And the defendant would owe an amount of tortious liability.
The unliquidated damages form an essential part of the law of tort as the recoverable amount depends from person to person and situation to situation and cannot be quantified at the time the damage had occurred.
Not all wrongful acts are intended as some such acts are without the best knowledge of the wrongdoer and lack of awareness care. Such a wrongful act is called negligence act. The liability arising out of such an act is referred to as a liability in negligence.
The nature of liability of such an act is dependent on the following factors:
- The wrongdoer had a duty of care
- The wrongdoer should have not complied with the duty of care
- The wrongdoer out of his acts has created a liability towards the damages.
The said duty of care may be explained with the following examples:
- Manufacturer-Consumer: A manufacturer has a certain level of duty of care towards the customers using his product
- Employer-Employee: It is the duty of the employer to provide a safe and healthy environment to hi employees.
- Driver-Passenger: A driver of a public transport vehicle has a duty of care towards his passengers as well as the pedestrians.
However, it is necessary to establish a duty of care in order to claim a liability of negligence such as in the case of a manufacturer and consumer. For example, it is a duty of the medicinal manufacturer to the prospective consumers that he mentions all the salts of the medicines on the pack to be sold in order to provide any damage to the health. For a certain act to be done out of non performance of duty of care the wrongdoer should have been obligated to perform such a duty, and that out of the said wrongful act the claimant suffered a loss or damage. Also, it is the duty of the claimant to establish the foreseeable nature of the wrongful act. In order to claim a certain amount of damages out of a negligent act one must establish the aforementioned facts.
P3.3- Explain how business can be vicariously liable
Vicarious means to be held responsible for the actions other than your own. Vicarious liability means any liability arising out of such actions to be taken care of the person representing or responsible for the same. In business, the liability of the company to be responsible for its employees or sub contractors actions is known as the vicarious liability of that business. In certain cases where the employer or the business owner controls the clients or customers, then also he may be el vicariously liable for their actions. Under the following circumstances the business may be liable:
- Harassment: if a sexual harassment at work takes place, the court may hold the business vicariously liable even if the owner had no information regarding the same.
- Medical Practice: If medical practitioner rents out a space to a friend with same skills to practice his own and that in his due course of business over there he faces a legal action then the owner could be held vicariously liable for the same.
Under any business there are abundant of circumstances where in the business owner may be held vicariously liable ranging from harassment, discrimination, libel, copyright infringement and the likes. The extent of employer’s liability depends from situation to situation. If the employee were working out of his duty to maintain his primary duty then the employers would be held vicariously liable. Therefore, unless the law mentions other wise the employer is ruled by the common law saying, that the one that acts through another acts in one’s own interests. But in case of the employee acting out of whims then the employer would not be held vicariously liable. [Allen, The Law Society Gazette, 2014. Vicarious Liability- the two-stage test (online)]
P4.1- Apply the elements of tort of negligence and defences in different business situations using business scenarios 5 and 6
Business Scenario 5
In the present situation the ship carrying the oil had a malfunctioning and eventually the oil was spilled onto the water. The wharf functioning 200 yards away came in close contact with the spilled oil. The owner was advised that any sparks from the welding equipment would not set fire to the oil. The more precise use of the word ‘unlikely’ tells us that the owner was not completely sure of the fact.
Therefore, it is observed that the ship did not practice the first, the duty of care. Secondly, that the wharf owner being unsure of the flammability of furnace oil still carried out his functions which could have been stopped. Although, the said situation is an act of negligence, the burden of the said act lies on both the parties as it could have been foreseen and avoided. Therefore, as per the principle of tort the owners of the wharf cannot sue the chatterers of the ship.
Business Scenario 6
Contracts And Tort Law Assignment
In the present situation the employee Bell had lost the sight of one of the eyes. However, Shell, the employer, still employed Bell onto a task of vehicle maintenance that had a small risk of eye injury. Yet, the employer didn’t take the necessary steps towards the safety of the employee. The employer had a duty of care and did not comply by the same that caused damage to the good eye of the employee. All the three elements of an act of negligence under tort are present making the employer liable to pay the damages. Bell can claim damages for the said accident.
P4.2- Apply the elements of vicarious liability in given business situations using business scenarios 7 and 8
Business Scenario 7
In the present situation Alf the employee was a caretaker of a ward of children under the employer who had a business of a care homes for vulnerable children in London. However, it was found out that he had sexually abused boys while they were under his care. Now, being an employee and present at the premises of the employer one may conclude that the employer must have had the knowledge about the said act or that even if he could have known that such a thing could happen he didn’t carry out the necessary steps for the elimination of such a situation.
Going by the general definition of vicarious liability one may infer that if an act takes place under the premises of the company then the employer may be liable even if he had no such information regarding the acts being carried out. However, the employee was not carrying out acts of sexual harassment to fulfill his duties, rather he did it at his own will. Therefore, even if the acts were being carried out under the premises of the employer, it would not vicariously liable for the same.
Business Scenario 8
In the present situation Amos Bridge is a pump attendant and has the responsibility of filling up the fuel and collecting money. However, he had a belief that one of the customers had no intention of paying off and wanted to drive away to which the customer was offended. The customer and Amos Bridge after a long heated discussion Mr. Khan, the customer accused him of disrespecting and misconduct and threatened that he would report such an act to the manager. After, the things were said Amos Bridge got angry and fisted Mr. Khan’s chin. Mr. Khan being the affected party wants to sue both the employee and the employer for the same acts.
Here, the vicarious nature of the acts is partial with the employer. Though Amos Bridge was acting in the best interest of the company to fulfill his duty, he became emotional and hit Mr. Khan at his own will. Vicarious liability lays only when the act was done in order to fulfill the primary duty and not when the employee acts out of whim.
Therefore, the employer would only be liable for the accusations made to Mr. Khan and not the act of physical hurt.
- Bailii, 2014, [online]
Accessed- 30 May 2015
- Peisker, 2014, [online]
Available: http://peisker.net/ffa/Terms.htm Accessed- 30 May 2015
- Bailii, 2014,  EWHC Exch J61, [online]
Available: http://www.bailii.org/ew/cases/EWHC/Exch/1836/J61.html Accessd- 30 May 2015
- Oocities, 2015, [online]
Available: http://www.oocities.org/the_law_page/offer/inv2treat.html Accessed- 30 May 2015
- G. S. Pollock (1964). Negligence—Duty of Care to Blind. The Cambridge Law Journal, 22, pp 189-191. doi: 10.1017/S0008197300085202. [online]
Available: http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=2953608 Accessed- 30 May 2015
- Contracts and agreements, 2014, [online]
Accessed- 30 May 2015
- Lawnix, 2013, 2 K.B. 571 (1919), [online]
Available: http://www.lawnix.com/cases/balfour-balfour.html Accessed- 30 May 2015
- Allen, The Law Society Gazette, 2014. Vicarious Liability- the two-stage test [online]
Available: https://portal.solent.ac.uk/library/help/factsheets/resources/referencing-law-harvard.pdf Accessed- 30 May 2015
- Translegal, 2015, SALE OF GOODS CONTRACT, [online]
Available: https://www.translegal.com/wpcontent/uploads/sale_of_goods_appendix_1.pdf Accesed-31 May 2015
- OPM, 2015, THE SALE OF GOODS ACT, Chapter 82
Available: http://opm.go.ug/assets/media/resources/337/SALE%20OF%20GOODS%20ACT.pdf Accessed-31 May 2015