Aspect of Contract

Table of Contents
Introduction........................................................................................................... 1

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Task 01 Scenario................................................................................................. 1
1.1 How a contract is formed and the importance of various elements in a
contract.............................................................................................................. 1
1.2 Impact of forming contract...........................................................................2
1.3 Evaluation of condition, warranty, in nominee and exemption clauses........3
Task 02 Case Studies........................................................................................... 3
2.1 Application of the elements of contract in the case scenarios......................3
2.2 Apply the terms on the following cases........................................................4
2.3 Evaluation of the effect of different terms in the given scenarios................5
Task 03 Vocational Scenario................................................................................ 5
3.1 Explanation of the similarities and dissimilarities of liabilities in tort with
contractual liability............................................................................................. 5
3.2 How liability for negligence can arise and the conditions needed to be met
for claimant to successfully prove negligence....................................................6
3.3 What is vicarious liability and how a business can be held under vicarious
liability................................................................................................................ 7
Task 04 Case studies........................................................................................... 7
4.1 Apply the elements of the tort of negligence and defenses in the given
business scenario............................................................................................... 7
4.2 Apply the element of vicarious liability in the given business situation........8
Conclusion............................................................................................................. 8
References............................................................................................................. 8

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Introduction
Aspects of contract refer to the elements that are must to be present whenever forming a
contract. Actually, the idea of legally enforceable contract formation came to protect the right
of people and different parties whenever they go for international business and financial
transition (Singh, 2010). So, even though the contract idea is available in the world and still
people become victim of fraud and deception, the idea is useless. So, people have to know
what contractual agreement is and how it can be lawfully enforceable. Here, the assignment
will write on aspects of contract. The following part will discuss on the elements, conditions
and types of different contracts and their impacts. Besides, there some given cases will be
analyzed for the better explanation and exemplification.

Task 01 Scenario
1.1 How a contract is formed and the importance of various
elements in a contract
Contract is any spoken or written agreement that comprises of a series of promises and
lawfully enforceable (Singh, 2010). A valid contract requires some elements to be present
mandatorily when the two parties are negotiating to come in a formal agreement. In below,
the elements and their importance have been shown for Peter Abraham:

Offer and acceptance: One party has to offer the other party with described considerations,
terms and conditions and the other party has to accept the offer as well the terms and
conditions. Similarly, Peter Abraham will have to offer his clients or clients will come with
their proposal and respected opposite party has to accept the offer.

Consideration: From Plimpton (2007), contract is formed of some agreed commitments or

promises. Unless there is any consideration, it will not legally enforceable. For example:
Peter Abraham will charge a certain amount for his services and the clients will expect to
have proper services in his building development.

Legal relationship: If the agreement is made for the purpose of illegal activities that are not
allowed by the current state law as well as international law, it will not be assumed as a
contract. So, Peter Abraham should avoid himself from getting involved in making such
illegal relationship.

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Free consent: Both the parties have to come to the agreement willingly and nobody is
allowed to force other by power or scare. For example: Peter Abraham cannot force his
clients to pay more charges neither his client holds the right to do that. If it happens, they can
ask for justice under federal law.

Capacity of the party: Both the party should be over eighteen years old to come in
agreement because the non-adult people are not considered to have full citizenship (Plimpton,
2007). If Peter Abraham makes agreement with any party below eighteen and anything wrong
happens, they will not have right to ask for compensation from the court.

1.2 Impact of forming contract

According to the situation, people are found to form different types of contract. In below,
impacts of three typed contracts have been shown:

Face to face contract: All the parties are present during the formation of the contract and
they can mutually negotiate terms and agreement between them when the contract comes to
be formed. It is a must in every contract that all the terms and conditions will be clearly
defined so that any breach of the agreement does not cause harm to the other party (Forest,
2008). Peter Abraham will be able to come in clear understanding with his clients if they can
make face to face contract. Besides, both the parties will get opportunity to make quick
questions to make even the simple things clear.

Written contract: It refers to a document printed on a paper sheet where all the parties have
described their terms and conditions in detail and finally signed by the parties. Generally,
written contract is said to the standard form of contract. Since, all the terms and conditions
are clearly defined in here, parties can easily suit for help anybody breach the contract.
Besides, Peter Abraham will be able to stay if anybody wants to form the contract for any
illegal purpose.

Distance selling: From Pesqueux (2012), sometimes, all the essential members cannot be
present during contract formation and as a result, they have to take help of any medium like
telephone or internet. Now, in many corporate offices, group members use Skype or similar
type other social network sites to continue board meeting where all the members can join
from anywhere of the world. But the disadvantage is this is not always possible to read the
body language over the online medium.

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1.3 Evaluation of condition, warranty, in nominee and
exemption clauses
There are some terms that can protect the right of the victim party in case the other party
breaches the contract. In below, these terms are described:

Condition: Pesqueux (2012) said that condition describes the duties and responsibilities that
the contracted parties have to do. Besides, it also refers to the qualification that is defined by
obligations. The mutual benefits will be ensured only when the both parties will carry on their
duties and meet the condition. In case of any breach of the conditions, the victim party holds
the right to ask for compensation.

Warranties: It has variety of meanings and used in different cases. But here, it is used to
provide guarantee and assurance that all the parties will be benefitted and every promises of
the contract is true and will happen. Besides, it also means, in case of any breach, the other
party will be compensated.

In nominee: This term is used to measure the cavity of damage due to the breach of contract
(Alaire, 2009). It measures how much it has affected to the victim so that he can be properly
compensated. This term has been criticized around the world by many scholars as it not
always possible to measure demerges. So, the degree of demerges is measured by the current
situation.

Exemptions clauses: Sometimes, it happens that unintentionally the some conditions of the
contract were violated (Alaire, 2009). It may happen due to the situation. For example, a
cargo ship was hit by big wave and the ship captain became bound to throw away some of the
cargo in the ocean to save lives of the crews. These clauses will save the defendants from any
financial compensation.

Task 02 Case Studies

2.1 Application of the elements of contract in the case
scenarios
Case 1

To come in agreement, there should be an offer and the offeree should accept the offer. The
offer should be made with all the required terms and conditions so that it preserves the rights
for both parties. Until and unless the other party accepts the offer, it cannot be an agreement.

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Here the same thing happened (DiMatteo, 2013). Carol email to the advertised address with
her proposal. The scenario shows, she was satisfied with the selling price and she wanted to
purchase it. Her intention was clear, the objective was legal but the other party (the selling
party) did not reply her email. It may happen the leather couch was sold or the seller had
made agreement before she emailed. So, according to the situation, it was not a contract.

Case 2

It says that contractual agreement has come to protect the right for each party and nobody is
allowed to use it for personal benefit. The scenario shows that George, Smith & Fogarty Inc.
hired Devi one day before Preston mailed and offered the George. So, George cannot enforce
the promises against Preston any more. Besides, all the activities had legal document. Devi
has his hiring document and probably he and the company signed on the hiring paper. So
here, Preston has an advantage to use the paper if George, Smith & Fogarty Inc. wants to use
the offer for the personal purpose. So, the contract is not enforceable.

2.2 Apply the terms on the following cases

Case 3

Exclusion clauses protect the right of the defendants to get rid of the allegation of the victim
party (Ma and Deng, 2012). Here, it was clearly mentioned on the back of the receipt that the
hotel authority will not be responsible for the missing of any valuable. So, everybody has to
be careful whenever they are put their cloths and other staffs. But, it happens in many
restaurants that whenever one is keeping is bag, suit or other staffs including valuable parts,
they mention it to the porter that there are some valuables inside. Right then the porter takes
care of it specially. But it did not happen. Besides, nobody noticed that there was a wallet
inside the suit so, he cannot show any witness. So, according to the scenario, the hotel
authority has right to stay on the exclusion clauses.

Case 4

Before Zehphra died, he made a promise with Aaron that he is not going to increase the
warehouse rent for the next five years. Definition of contract also holds that oral commitment
will also be allowed as contractual agreement. By the time, Zehphra died and in the
meantime, Aaron made some development in the warehouse. So, he has legal right to retain
the warehouse till the contractual period finishes and Yeti cannot acquire it before anyway.
Even, Yeti has no legal right to increase the rent rate right now. Contractual law does not say

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that conditions changes when inheritance changes. The point raised here whether Aaron holds
the right to get back the repairing cost is no longer necessary. He can continue his activities
with the warehouse till the period ends. But if Yeti wants to acquire it before, he has to
compensate for the repairing cost.

2.3 Evaluation of the effect of different terms in the given

scenarios
Case 5

Contract policy insurance is different as they have to study the background history to measure
the probable risk (Steingold, 2011). Accordingly, they decide the dividends and the amount of
insurance. So, in this case, anyone hides or try to any necessary information asked in the
application form or by the interviewer, the applied party has to disclose it clearly. This is the
policy followed in insurance organizations. If anything wrong is found later, the entire
contract is void and if necessary the insurance organization can case in court. Here, the
policyholder did not disclose that he made a theft claim before within the five years although
it was asked in the form. So, right now, the insurance company has right to cancel the
contract and if they want, they can continue but it is up to them. At this situation, if the
company is financially loss something, they can ask for compensation through court.

Case 6

It is a complicated issue. The insurer was negotiating with the policyholder but the claims
were made by her husband before and she is not informed about it. Right now, the insurer
cannot cancel the contract only for the reason that she hide about her husbands facts. It may
be true that she does not know that her husband made the two claims before. Sometimes, it
happens somebody hides serious facts even though they are couple. So, the insurer company
has to investigate on the case. They can call her husband with her wife, interview them and if
their answers showing that they are intentionally lying, they can cancel the contract and case
against the policyholder otherwise they have to continue with the contract. They cannot void
it right then.

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Task 03 Vocational Scenario
3.1 Explanation of the similarities and dissimilarities of
liabilities in tort with contractual liability
Tort describes the loss caused due to counterpart due to the carelessness, misconduct or fault
performance (Tuner, 2014). It is a situation where one party is financially harmed by the other
party. The term tortuous liability has come to measure the loss caused to the victim party.
Accordingly, the defendant party is held responsible to compensate as they have violated the
conditions of the contract. According to the definition of contract, when due to the breach of
contractual conditions, the contractual agreement is violated; it is classified as the contractual
liability.

From Tuner (2014), there are not many similarities between the two terms. The only
noticeable similarity is, the victim party has to be compensated by the defendant party due to
their contract violation. But originally, tort and contractual liability are different. In tort
liability, the defendant party does not loss anything but the damage is caused only to the
counterpart party. But in contractual liability, both the parties are harmed due to the breach of
contractual agreement.

3.2 How liability for negligence can arise and the conditions
needed to be met for claimant to successfully prove
negligence
Liability describes the roles and responsibilities that are supposed to be carried out by the
contractual parties for their mutual benefits. But due to carelessness, some party may not
fulfill their responsibilities and this is defined as negligence of liability (Morgan, 2012).
There are some conditions to be present to prove negligence and they are in below:

Duty of care: Morgan (2012) said that it describes the roles and activities are must to carry
out to ensure the safety and wellbeing of the contractual agreement. Negligence happens
when one party become careless to their duty. For example: when you are driving with
crockeries to deliver to the client, you had to use soft fabrics foam to cover them so that they
do not get broken during driving in the jig-jug way. Due to carelessness, the courier did not
do it and it falls under negligence.

Breach of duty: It is referred as the most important cause behind the happenings of
negligence liability. It takes places when the defendant party fails to maintain the expected
level of quality in their services. For example: the courier organization had to packet the

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crockeries with foam before they are handing it over the deliveryman. It is the responsibility
of the packet checking department but they did not (Binsbergen and Brandt, 2007).

Damages of negligence: It has to be ensured that the damage has been caused only due to the
negligence of the defendant party and not by else. For example: if it would happen that the
crockeries were packaged perfectly but there was a robbery in the delivery van or an accident,
it would not be held under negligence.

3.3 What is vicarious liability and how a business can be held

under vicarious liability
In negligence liability, the guilty party is held responsible and asked for the compensation.
But vicarious liability is different. Here a third person is held responsible because of this
carefulness toward his duty. It happens when an organization became fail to carry out the
order for the carelessness of him employees or else member. In below, with an example it has
been explained (Carver, 2005).

An advertise firm has been ordered to make TVC for a mobile company about their upcoming
brand. The firm has called their artist and he has been asked to complete the TVC within 1
month. The artist got agreed. But he started facing some family conflict and he got frustrated
with it. Even he forgot to say it to the company and after the date got over the firm asked the
artist and he said he was so depressed that he forgot to say it. By the way, the ad firm became
liable to the mobile company.

Task 04 Case studies

4.1 Apply the elements of the tort of negligence and
defenses in the given business scenario
a) When the hospital will be held responsible for negligence

It was not mentioned whether the nurse took an inspection over Mr. Brown like physical
temperature, blood pressure, age, background information like does he have diabetic or else
etc. If she had said all the information and the current situation to the doctor in detail and the
doctor prescribed him, then according to the situation the doctor and the organization will not
be held responsible for negligence. Even if there was no doctor else in the care center and it
was impossible for the patient to go to other care centers, the doctor will be excluded from
the responsible of negligence.

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b) When the hospital will not be held responsible for negligence

If it happens, there were many other doctors available in the care center but due to long
schedule, he was not getting chance to show up. Besides, if the nurse had not described the
physical condition of Mr. Brown to the doctor over phone and hence the doctor gave him an
average treatment, the doctor as well as the organization will be held under responsible for
negligence.

So, it depends on what happened in there and will be decided according to the situation.

4.2 Apply the element of vicarious liability in the given

business situation
Case 8

According to the vicarious liability a business organization will be held responsible for the
performance of his employees. Here, it was the same. Here, the driver forgot his limit of
alcohol and due to his over drinking, he concentration over his driving and eventually, he lost
his control and crushed. It completely happened due to his carelessness. Although Chauffeur
Company did not have made anything wrong, they will be held responsible under the
vicarious liability.

Case 9

Here the truck driver cannot be held responsible alone. It has to be investigated why his truck
slept. Was there any lubricant or any other staff were over the road that forced it to slip. If it
happens, the drive was not concentrative to his driving or he took drug before or drunk or was
sleep or else, he and the organization will be held responsible under negligence liability. But
it happens that there was moisture or any other liquid on the street and the driver could not
understand it well, the responsibility will not fall over the company only. So, it is now
depending on the situation.

Conclusion
So, after the analysis and study over the cases, it is now easy to imagine how important the
elements to be present in the contract and why it is so necessary to follow the contractual
laws. It has helped me a lot in developing my concept and idea about contract formation for
the career development. Besides, it will also help me in my personal life as well whenever I
will have to deal with other people.

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References
Alarie, B. (2009). Mutual misunderstanding in contract. American Business Law
Journal, 46(4), pp. 531-572
Binsbergen, J. and Brandt, M. (2007). Optimal asset allocation in asset liability
management. Cambridge, Mass.: National Bureau of economic research.
Carver, J. (2005). The contract between accountability and liability. Board leadership,
2005(78), pp.5-5
DiMatteo, L. (2013). Fifty years of contract law scholarship in the American Business
Law Journal, Am Bus Law J, 50(1), pp.105-158.
Forest, G. (2008). The music business contract library. Milwaukee, Wis.: Hal
Leonard.
Ma, Y. and Deng, J. (2012). Service encounter and customer psychological contract.
JBAR, 1(1).
Morgan, J. (2012). Business law. Redding, CA: BVT Publishing
Pesquesux, Y. (2012). Social contract and psychological contract. Social and business
review, 7(1).
Plimpton, L. (2007). Business contracts. [Irvine, Calif].: Entrepreneur press.
Singh, A. (2010). Business and contract law. London: Thorogood.
Steingold, F. (2011). Legal guide for starting & running a small business. Berkeley,
Calif.: Nolo.
Turner, C. (2014). Unlocking contract law. Abingdon, Oxon: Taylor and Francis

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