ContentsTask-1..........................................................................................................................................................1

P1.Understanding the essential elements of a valid contract in a business context...............................1

P1.1 explain the importance of the essential elements required for the formation of a valid contract.............................................................................................................................................................1

P1.2- discuss the impact of different types contract...........................................................................3

P 1.3 Analyze terms in contracts with reference to their meaning and effect.....................................4

Task – 2........................................................................................................................................................6

P2. Be able to apply the elements of a contract in business situation.....................................................6

P2.1 Apply the elements of contract in given business scenarios........................................................6

P2.2 Apply the law on terms in different contracts.............................................................................7

P 2.3 evaluate the effect of different terms in given contracts............................................................8

Task -3.........................................................................................................................................................9

P3. Understanding the principles of liability in negligence in business activities.....................................9

P3.1 Contrast liability in tort with contractual liability........................................................................9

3.2 Explain the nature of liability in negligence.................................................................................10

P3.3 Explain how a business can be vicariously liable........................................................................12

Task-4........................................................................................................................................................13

P4. Be able to apply principles of liability in negligence in business situations.....................................13

P4.1 Apply the elements of the tort of negligence and defences in different business situations using the scenarios 5 and 6 given below...........................................................................................13

P4.2- Apply the elements of vicarious liability in given business situations using business scenarios 7 and 8..................................................................................................................................................14

References.................................................................................................................................................15

Task-1

P1.Understanding the essential elements of a valid contract in a business context

P1.1 explain the importance of the essential elements required for the formation of a valid contractWhat is contract: contract is an agreement which is made by the two or more parties for

consideration. And they have also intention to create a legal relationship between them. The

parties in the contract must give their consent must be willfully. There is no undue influence,

force and fraud. Contract can be made between the employment, hire purchase, consumer credit,

mortgage, marriages etc. (businessdictionary.com, 2015)

Invitations, acceptance and offers:

An invitation is that in which an individual invite another person for making an offer.

An offer is must be distinguish from the offer.

Examples of invitations are:

1. Any goods which are sold in the market are invitations for the consumer for buying their

product.

2. Any goods which are show in window of the shop is also an invitations.

Any sale of product through auction it is also an invitations from the auctioneers (Harris v

Nickerson)

Terminated

1. Before acceptance of the invitations offer can be revoked.

2. Due to death offeror.

3. If the offer is rejected by the individual.

4. Time period of acceptance of the offer is over.

Offer

It is half of agreement.

Offer must be capable to distinguish from invitations.

Case: Scammel v Ouston [1941]

Ouston make an order for the truck which is on hire purchase term. Truck supplier has

number of different hire purchase arrangements. But in this case the terms which is used

in offer is not clear.

Held: court held that the term which is used in the agreement is not clear and it is too

vague. So there is no contract exist.

Acceptance

Acceptance is the other half of the agreement.

Acceptance must be complete and also communicate to the third party.

If any person accepts the offer by mere silence is not acceptance of the offer.

Case- (Entores v Miles Far Eastern Corporation (1955)

Consideration

Every contract which is made by the parties must be for some consideration.

Promise is given by the promisor to the promisee that he will pay consideration.

When the promise is given to the promisor then promise is abstained from doing

something in past or also abstained doing something in future.

Consideration must have some value which is passed from one party to another party.

Case: Thomas v Thomas [1842]

Intention to create legal relationship

Both the parties in the contract must have intention to create legal relationship.

The intention of both the parties must be free consent means that the consent must be free

from any undue influence, force, fraud, etc.

If the intention has been taken by any force, fraud any undue influence then the contract

Is not valid. And it becomes void.

Case: Rose and Frank Co V. Crompton Bros [1925]

Legal capacity

It is necessary that both the parties who enter in the contract must be legal capacity.

The terms and conditions of the contract must not be against any of the provisions of the

law.

For instance: contract is made for the theft or robbery of the bank. Then this type of

contract have not any legally validity

Capacity

The parties who are entering in to the contract must be in capacity.

Party should not be unsound mind.

No party is minor

Both are competent in the market. .(awhandbook.org.au, 2015)

P1.2- discuss the impact of different types contract

1. Aleatory Contract

Aleatory contract is that contract in which both the parties makes a mutual agreement that the

agreement will take effect only after occurrence of certain event in the future. For example: fire

insurance policy, this is one of the types of the aleatory contract in which party is compensated

when the fire is occurring in the company or in house.

2. Bilateral contract

In this contract both the parties exchanges their promise mutually to one another. It is also called

the two sided contract because this contract is arise when the offeror made the promise to the

offeror and return of the promises which is made by the offeror.

3. Unilateral contract

Unilateral contract is that contract in which one party gives the promise to another party. It is one

sided contract so the individual who make an offer is bound by the court of law. In this if the

offeree not doing his act then he will be not sued for anything.

4. Express contract

Express contract is that contract in which parties express their terms and conditions in oral,

writing, or by word at the time of making the contract.

5. Implied contract

Implied contract is that in which parties used the terms and conditions in oral not in written form.

6. Void and voidable contract

Void contract are those contract which they have no legally validity, and they are also not

enforced by the law.

Voidable contract are those contract in which one of the parry make the contract void like he is

minor, not sound mind. Etc.

7. Distance sale contract

This contract is involved in the online shopping. In this the consumer cannot make inspect of

the goods before purchasing the goods.

P 1.3 Analyze terms in contracts with reference to their meaning and effect

What is a contractual term?

Contractual terms are those terms which is used by the both the parties in the contract. it is

necessary that there is contract terms in the contract because when the dispute is arise then it is

difficulty arise that which term is used in the contract so it is necessary that there must be term

which is used in the contract. The term which issued in the contract is the part of the contract.

The contract terms are:

1. Conditions

2. Warranties

3. Exclusion clause.

Conditions terms

It is most important term in the contract.

Parties in the contract must have to enter with the conditions in the contract.

If any of the party of the contract breach any of the condition in the term then contract

becomes void.

Warranties

It is not much important as the conditions are important.

If any person breaches the warranties then it leads to damages.

Exclusion clause

This clause restricts the rights of the parties in the contract.

There are three types of exclusion clause:

1. True

2. Limitation

3. Time

Task – 2

P2. Be able to apply the elements of a contract in business situation

P2.1 Apply the elements of contract in given business scenarios.Business scenario 1

For the sale of the contract essential elements are mentioned below. These are:

1. There is the contract exist

2. Contract must be between the two parties.

3. There is property in the goods.

4. There is money consideration.

5. Agree for the transfer.

In this situation Miss kaur has claim against the harry. Harry promised her that he will not sell

the watch until she comes back and purchase the watch. And harry also give promise to kaur that

watch is Rupees 950 for her. But when the lady kaur came back form, the lunch she found that

the shopkeeper sold that pen for rupees 1000 to another customer. So because of the shopkeeper

assurance lady kaur went for the lunch and shopkeeper is not keeping his promise. So in this

case harry done the breach of contract. There is no need under the contract laws that the contract

for sale is in written form. In this situation the contract is oral. [Oocities, 2015]

Business scenario 3

Here in this situation Mia started a business as a self-employed builder. To give him start in the

career Hakim said he would give him £2,000 if he repairs the bathroom and roof. Also his friend

Jane asked him to do work for her business for a fixed price of £1,000. Here both the cases are

clear in the nature of contract of service. Both hakim and Jane entered into a valid contract with

Mia for the work. So for the fulfillment of the contractual terms both the parties have duties to

fulfill. Here Mia got a duty to complete the work and both Hakim and Jain had duty to make the

payment after the successful completion of the work. Mia completed the work so he fulfilled his

contractual obligation. But Hakim and Jain didn’t make the payment for Mia giving some

reasons which are against the basic principles of contractual laws.

On the part of both hakim and Jain it is clear breach of contract. Breach of contract is that in

which one party make offer and other party accept the offer and one party breach the conditions

of the term then it will lead to the breach of the contract. If any party under the contract through

any action by doing any performance or anything which is like to be that one party in the

contract does not perform his duty then it lead to the breach of the contract. it is also a civil

wrong, if it minor or partial breach, where there has been substantial performance, the non-

breaching party can only sue for the actual damages not for the specific performance.

So here in this situation it is a clear material breach of contract and Mia can go to a civil court

for breach of contract against both hakim and Jain. Mia can claim damages from hakim and Jain

and Both will be liable for compensation.

P2.2 Apply the law on terms in different contractsSale of good contract the following terms [Translegal, 2015]

1. Payment: In this clause the payment amount due date of payment and other conditions which

are necessary are mentioned.

2. Prices: The price which is mentioned in the contract does the purchaser is give consent in the

contract. So price is binding in nature and this will be not changed or avoid.

3. Risk of loss: there is risk of loss in the contract whether it is manmade or the natural. This

stated that which events are not included in the contract.

4. Rights and duties: Both buyer and seller have the right and duties under the contract. [OPM,

2015]

Rights and duties of the seller are:

1. Seller offered the competent price.

2. Seller has duty to check the product regular

Right and duties of the buyer:

1. Before the acceptance of the gods the documents will be inspected.

2. He has the duty to pay on time.

Returned: The goods will be return under the some mentioned situations.

P 2.3 evaluate the effect of different terms in given contracts

In this scenario miss y is engaged with the Mr. x in the special circumstances. She is the research

assistant of Mr. X. The conditions are in the written form and they are mutually agreed. In

clause 6 it shows that she always dress smartly. And in any conditions she is not using the

trouser which is not acceptable in any circumstances. In clause 7 she is always on time and work

for whatever’s hours which are necessary for the assignment. She accepted all the conditions and

which are implied as she joined the post.

There is contract between the x and y and both are under the obligation of the contract, and they

have to fulfill the same. The salary of the miss y is £25000 and x is under the obligation that he

has to pay the salary after the completion of the month on all 3 years. She is under the duty of

clause 6 and 7 to complete her work at a time as well x is also under the obligation that he also

complete his work before the stipulated time. In this situation y violated the clause 6 she did not

dress properly she is not complete the work on time which is mentioned in the employment

contract. The clause 6 clearly stated that she is not allowed to wear the trouser in the working

hours of the office. In the contract of employment it is clearly stated that there is common dress

code in the office and it is applied to all the employees, so if any one wear the trouser then she /

he will be liable for the breach of the contract. From this Miss y is breach the contract by

wearing the trouser and also violated the clause 7. Then Mr. X can take the civil action against

the Miss y for breaching the contract. He also can claim for the compensation or termination of

Miss y form the services of as research assistant.

Task -3

P3. Understanding the principles of liability in negligence in business activities

P3.1 Contrast liability in tort with contractual liability

What is tort?

Tort is an act which causes injury to an individual body or destruction to individual legal rights

those who are under statue duty. Any person who suffer damages or any loss can file the suit in

the civil court and court give the order not to doing any act repetition. Compensation is given to

the party for the destruction suffered by the party in tort. When there is any type of violation

caused by the party in duty of care then tort will arise. Party voluntarily cannot take the liability

in tort.

What is contractual liability?

Contract liability comes in existence when party binds together with a contract. The liability in

the contract depend upon the party suffered the damage.

Prime differences between them are:-

• Agreement result

• Law result

For taking back their loss, party sue against the defendant .court makes order to the defendant to

pay the compensation to the plaintiff for the loss he suffered due to the negligence of defendant.

Party voluntarily can take the liability but in tort party voluntarily cannot take the liability. The

party who suffered loss is awarded with damages for getting back their status in the contract.

3.2 Explain the nature of liability in negligence

What is Negligence?

Negligence is that in which one person harm third person without any intention, but accidently.

These elements are included for committing the tort of negligence. These are:

1. There is tort committed by the individual

2. Tort is committed without intention

3. It must be accidently

In this the party who suffer any loss, damage or injury due to the negligence of one person can

file suit for compensation in the court. The objective of the negligence is to compensate the

suffering party. After filing the suit in the court then the claimant has to prove these against the

defendant. These are:

1. Act is committed in the duty of care.

2. The act gives loss, damage

3. Person breaches his duty of care.

Duty of care: it is necessary that the claimant proved that the defendant doing the negligence in

duty of care. The claimant is necessary to establish that the defendant duty of care. The existence

of the duty of acre is depend upon the various test which is applied to different loss and the loss

type. Any person who is becoming liable under this it must be in the duty of care. Few examples

of duty of care are:

1 The manufacture is under the duty of care for the consumer for the product which they used.

2. In the workplace employer is duty of care for their employee.

The test under the duty of are:

1. Caparo test

2. Neighbour test

Case related to the duty of care is Caparo industries PLc v Dickman [1990] 2 AC 605

The claimant has to establish under the Caparo test:

• The harm which is suffered by the claimant is fairly anticipated.

• The relationship is very close.

• There is fair and just for imposing the duty of care. (lawresources.co.uk,2015)

Act: The person who suffers loss damages or any injury is must be by doing any act by the

defendant. So party has to prove that he suffer the loss or damages.

Breach of duty: claimant has proven that the breach of duty of care by the defendant. The tests

for the breach of duty are:

1. Subjective: The defendant who knows and reveals the plaintiff about the loss, damages

and breaches of duty.

2. Objective: The defendant who does not compensate the plaintiff for the loss and damages

and the situation is also same situation. Thus it also leads to the breach of duty.

3. Case: United States V. Carroll Towing Co. 159 F. 2d (2d. Cir. 1947)

P3.3 Explain how a business can be vicariously liable

Vicarious liability is that under which the person is held responsible for the act done by the other

person. If any deed or omission is done by his client principal is responsible for this. The act or

deed which is done by his labour at his work steed, the employer is answerable. If deed or any

wrong act done by his authority, superior is held reasonable for this.

The important elements in the vicariously liability is:-

1. Vicarious

2 liabilities

Under the tort of negligence, employers are held responsible for the third party but some

employers are not aware about the responsibility in the course of their employment. The doctrine

“respondeat superior” make responsible to the employer against the act which is doing by the

employee.

What is professional negligence?

Professional negligence is that in which professional is held responsible to the client.

Professional negligence is made by the professional. Professional negligence is committed by the

professional under the duty of care. If any act committed by the professional then he will liable

for compensating the suffering party.

Professional negligence is so different from the normal negligence. In normal negligence the

reasonable person is held responsible under the duty of care. But in professional negligence the

professional is held responsible for the clients.

Basically vicarious liability is that in which the person is held responsible for the act which is

committed by the other person.

Company is held responsible for the employees, subcontractor or any person which uses the

space or any facility.

For instance: employer is held responsible if he harassed or exploits the employee in the

workplace.

Employer is also responsible for the act which is done by the third party, any clients or nay

customer.

Task-4

P4. Be able to apply principles of liability in negligence in business situations

P4.1 Apply the elements of the tort of negligence and defences in different business situations using the scenarios 5 and 6 given below

Business scenario 5

There was A UK ship taking the oil in Sydney harbour. Thus the oil was flow out in to the

water and it is drifted the 200 yards away where the welding work is going on. The owner was

advised that the spark of the welding would be set the fire. Oil was flow out on to the water is not

the negligence on the part of the UK ship. There is lack of care which shows the on the part of

the defendant to impose liability upon him for the tort of negligence. The oil which was flow out

on the water Is not considered that the defendant don the lack of care. Owner told to the welding

workers that to stop that welding work otherwise it sets the fire form the sparks, but he ignore it

and felt it is not true. So the fact shows that it is the contributory negligence. Contributory

negligence is that in which claimant cannot get the full compensation which he claims. And he

held responsible for himself injury. Thus the compensation is also reduced because of the

contributory negligence. There is test which is applied for testing that contributory negligence is

done or not. If it is one than the plaintiff claims is also reduced. So actual finding is that fire is

set due to the spark is fell down on the cotton. So UK ship is not held liable.

Business scenario 6

In the present situation bell is an employee who is lost is one eye sight during the maintenance of

the vehicle. Shell has to take the due care when he is appointing the one eyes employee in the

maintenance of the vehicle. According to the law of negligence it is necessary that proper care

should be taken or absolute care form the part of the employer is always responsible for the

employee. Bell faces the injury of eye. The employer has to take the necessary steps, but the

employer did not take the necessary steps for the safety of their employee. The three elements

are present of an act of negligence under tort. Bell can claim the damages or compensation 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 this scenario Alf is an employee in London who was the caretaker the children in London

under the employer. However he found that he sexually abused the boys when they are under the

care of the Alf. now the being an employer he had the knowledge about the said act which is

doing by his employee Alf and even he did not take the necessary step which is necessary for

eliminate this type of situations. Vicarious liability: vicarious liability is a situation in which the

employer is always held responsible for the employee. if any wrong done by the employee then

the employee then employer is held responsible but for making the liable to the employer it is

necessary that the act is done in the workplace and it is necessary to do under he employment.

So the employee was carrying the sexual harassment t it is not the part of his duty, he doing as

his own will. So the employer is not liable for the Alf act even he doing in the premises.

Business Scenario 8

In this situation a pump attendant was employed by AB and sons garage ltd. He was on duty he

fill the petrol tank of Mr. Alex Khan and he believed that Alex will ran away without paying the

diesel payment. So there was argument started between the Mr Khan and Mr Bridge, 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.

Amos Bridge was acting in the favors and best interest of company and for fulfilling his duty but

at his own will he hit the Mr. khan. Vicarious liability also lays down that when any act done in

order to fulfill the primary duty and not when the employees act out of whim.

So, employer is not liable for the accusation of Mr. Khan and for the physical hurt.

References BusinessDictionary.com,. 'What Is Contract? Definition And Meaning'. N.p., 2015.

(Web. 14 June 2015).

Lawhandbook.org.au,. 'Elements Of A Contract'. N.p., 2015. Web. 14 June 2015.

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https://www.translegal.com/wpcontent/uploads/sale_of_goods_appendix_1.pdf Accesed-

15 june 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- 14 june 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- 15 june 2015

Findlaw,. 'Proving Fault: What Is Negligence? - Findlaw'. N.p., 2015. (Assessed 14 June

2015)

E-lawresources.co.uk,. 'Duty Of Care'. N.p., 2015. Web. 14 June 2015.\

Oocities, 2015, [online]

Available: http://www.oocities.org/the_law_page/offer/inv2treat.html Accessed- 30 May

2015