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UNIT 5: ASPECTS OF CONTRACT AND NEGLIGENCE FOR BUSINESS

INTRODUCTION
This report focuses on the identification of the aspects of contract and negligence for business.
There are agreements and contract in every business in recent than before. Verbal agreements
are usually no longer used by the businesses. Written agreement in the form of contract is ore
preferable to all. But, the profitability of contract is incomplete if the regulations and aspects are
unknown. Well acknowledgement of contract in business provides a legal documentation
securing the expectations of the parties involved. Contracts work as a safety tool of the
resources. On the contrary, negligence is rising into the cornerstone of our system for
compensating people for accidental damage and injuries. This is because it allows the courts to
award damages in tort in some circumstances where it is not possible to do so in contract. This
report will help learners to understand in and all about the contract formation and negligence of
contract in businesses.

LEARNING OBJECTIVES
TASK 1 Understand the essential elements of a valid contract in a business context TASK 2 Be
able to apply the elements of a contract in business situations TASK 3 Understand principles of
liability in negligence in business activities TASK 4 Be able to apply the principles of liability in
negligence in business situations.

TASK 1
LO 1.1 Importance of the essential elements required for the formation of a valid contract Offer
and Acceptance: The existence of an offer and an acceptance are a process of dissect the
procedure of arrangement to decide whether an agreement has been created. Common
consent of the parties is necessary of an agreement. Without an agreement, contract is
impossible. Consideration: another vital element is consideration of the parties related to the
contracted subject. Legal consideration makes the parties form a contract. Capacity: Both or all
of the parties need to be capable to deal an agreement. Having mental disorder, under age etc.
make incapacities to form a contract. Consent: The understanding would be invalid, if the part
doesnt come without consent. Consent means willingness of the parties. It might be influenced
by several issues. Certainty: It is needed to the subject of the contract be certain. Uncertainty
creates ambiguity in the contract. Lawfulness: The subject is important to come into deal or
contract legally. Otherwise, it wont be count as a contract according to the law. LO 1.2 Impact of
different types of contract

Bilateral and Unilateral Contracts


If two parties exchange a shared and equal guarantee that ensures the execution of a gesture,
a commitment or a transaction or avoidance from execution of a demonstration or a
commitment, concerning each gathering included in the agreement, is called as bilateral
contract in the aspects of law. It is also called as a two-sided contract. Unilateral contract is a
guarantee provided by one and only gathering. The offeror who offers, guarantees to execute a
certain gesture or a commitment if the offeree who accepts the offer, coincides on performing an
act that is seen as a lawfully enforceable contract. It usually asks for an acknowledgement from
the other gathering to get the agreement executed. As a result, it is an imbalanced contract
since just the offeror is certain to the court of law nor the offeree. An important objective of this
type of agreement is that, the offeree can't be sued for refraining, forsaking or actually
neglecting to execute his demonstration, since he doesn't guarantee anything. If two parties
trades a mutual and reciprocal promise that implicates the execution of an act, refraining,
abandoning or even failing to execute his act, since he does not promise anything. LO 1.3
Terms in contracts with reference to their meaning and effect

CONDITIONS
A condition is an important matter of subject which is considered as the basic to the main cause
for the formation of agreement. A breach of condition qualifies the harmed party for denying the
agreement. WARRANTIES

Warranty is a less essential but unavoidable term. It is count as a must to the agreement as it is
not fundamental. A warranty gives the harmed party the right to claim harms and the claimed
party can't revoke the agreement. INTERMEDIATE TERMS

It is tough to define a term appropriately before time as either a condition or a warranty. A few
issues may include a moderate position, in that the term could be surveyed as the outcomes of
a break. Considering that a rupture of the term brings about extreme harm, the harmed party will
be qualified for coercing the agreement where the break includes minor misfortune, the harmed
partys cures will be limited to harm.

TASK 2
LO 2.1 Application of the elements of contract
In the law of contract, the offer and acceptance is so conventional and significant. The principles
of offer and acceptance include a standard offer, acceptance and correspondence around the
two or more parties or people making the agreement is significant. In the given business
scenario, it is noticeable that the examples of forming an agreement is when Mr. John was
responded the duty of assuring new PC framework. He decided to buy from "Best Computers",
and marked a business concurrence with that organization for the supply of new machine
frameworks. In business concurrence with Best Computers, the terms and conditions of the
agreement were not clear enough, and Mr. John signed that contract without a bit regard for the
all aspects of the assertion, which created a misery for him and few days later when they
neglected to supply the machines on time and most of them were harmed. That happened
because of the contractual subjects were not checked properly. The offer must be unequivocal
and immediate to an alternate party to contract. LO 2.2 Application of the law on terms in
different contracts The Sale of Goods Act-1979 can be applied in the case of the case between
Linda Green and the wholesaler. The act can be applied in the case in the following ways: If
Linda Green wants a claim under the Sale of Goods Act, she has several possible ways of
resolving the issue depending on the circumstances and on what she wants to be done. Well
here the rights are against the wholesaler not the manufacturer as the seller was liable because
of the wrong supply of product. The Sale of Goods Act 1979 gives the right to the buyer to get
replaced, repaired or refunded if the goods are faulty and it is returned in the time as per the law
provides that is 3-4 weeks after purchase depending on the type and nature of the faulty
product. So Linda Green can reject it and get a refund in stipulated time. The retailer must repair
or replace faulty goods within a reasonable time. If dont, Linda will be entitled to claim either a
reduction on the purchase price or recision. If the retailer refuses, then the compensation can be
claimed by repairing it by someone else and collect the amount there of (Simon and Gillian,
2005). But Lindas claims end up in court, and then she has to prove that the fault was present
when she bought the item

and it wasnt the result of normal wear and tear. But if it is beyond six months, expert opinion is
required to prove the faulty product. So given the following situations, Linda Green can easily
succeed in claiming for the faulty goods.

LO 2.3 Effects of different terms


A proper evaluation of the effects of different terms is necessary to proceed with the contract.
Here, a situation was given where some terms are noticeable. The followings are some of the
terms of John's contract with the Best Computers: The seller will not carry the risk for any
damage or misfortune occurred by any flaw in workstation. Parties are able to cancel the
request through a former notice of three days without acquiring any obligation for any
misfortune. Value paid by clients is not returnable by the organization at the cancellation of the
agreement. These are some essential terms included in Johns contract with the Best
Computers. The organization should have been obligated to guarantee the safety of furnishing
right machines or any available items without any mischief. The organization should have been
responsible to answer for any occurrence. But conditions should be included in the
understanding of the agreement. Creating legitimate framework of the cancellation of agreement
is moreover imperative throughout the given contract, but making some terms unnoticed is not
lawful, all the terms and conditions involved in an agreement must be well defined and clear
enough. TASK 3

LO 3.1 Liability in tort with contractual liability


There are some significant differences exist in between the liability in tort and contractual
liability. Some among of them are as: Contractual obligations are willingly done but tortuous
obligations are implemented by law. Contractual obligations give a free choice to enter in a
contractual relationship but tortuous obligations provide no choices. a person is liable to pay or
owes a duty only to the contracted party but liabilities in tort means that a person is liable to owe
duty to all as not to defame or trespass others property. A historical difference of formation
exists in these two. The contractual liability is created from three parts of actions as debt,
covenant and sumps while the liabilities in tort are derived from the right of trespass. Usually
liability in contract is strict and unavoidable once formed but the tortuous liability is based on
fault. Any fault comes into account in the tortuous liability. It is more like common for everybody
of a certain matter. The liability in tort is always paid lame care while the liability in contract is
not at all. LO 3.2 Nature of liability in negligence

In the given situation, the management of the organization is liable for the harms and injuries
caused by the slippery floor of their office and they should also be considerable enough to
consider themselves reliable for the damages or harms caused due the faults in their products.
Strict obligation is risk without flaw. Recollect strict risk is not categorical obligation and is worth
researching of the law on this zone. As depicted prior that tortuous obligation rotates around
obligations settled by law. While strict risk is a standard for obligation which may exist in either
by a criminal or civil connection. A rule defining strict obligation makes an individual legitimately
answerable for the harm and misfortune brought on by his or her enactments and oversights
paying little heed to culpability. In the given situation the administration of Best Computer is
answerable for the damages and wounds brought about by the tricky floor of their office, and
they might as well likewise be sufficient to view themselves as dependable for the harms or
damages initiated due the issues in their items. LO 3.3 Concept and elements of vicarious
liability

Vicarious liability
Vicarious liability refers liability for the torts of others. It arises due to a relationship between the
parties. It is a doctrine of English tort law that imposes strict liability on employers for the
wrongdoings of their employees. Generally, an employer will be held liable for any tort
committed while an employee is conducting their duties. The vicarious liability provisions of the
legislation are only applicable where the alleged discrimination and harassment occurs in
connection with the persons employment. This means the employer may be held vicariously
liable for the actions of employees if they have not taken all reasonable steps to prevent the
discrimination and harassment from occurring both within the usual work environment and at
employer events, such as sponsored seminars, conferences, work functions, Christmas parties,
business or field trips. An employer may be vicariously liable for the conduct of:

individual employees or groups of employees


directors, supervisors or managers
workplace participants
agents
contract workers or people being paid commission
a partner of a company harassing another partner
Liability of individuals
The vicarious liability provisions of the legislation do not preclude individual persons from being
held liable for their own discriminatory or harassing behavior in the workplace or in connection
with their employment. It may be that both the employer, who has been found to have not taken
all reasonable steps to prevent the discrimination and harassment from occurring, and the
individual, who is the alleged discriminator or harasser, will be held jointly liable for the
behavior.

TASK 4
LO 4.1 Application of the elements of the tort of negligence There are several components of
negligence that obliges that an offended party illustrates the accompanying four variables. They
are: The litigant owed an obligation to the offended party

The litigant abused that obligation


As a consequence of the respondent's violation of that obligation, the offended party endured
damage The damage was a sensibly predictable result of the litigant's activity or inaction In this
situation, the innocence is happened when number of people slipped at floor of the Best
Computer office. In fact, they may as well inform the wet floor and show people entering to their
office premises.

LO 4.2 Application of the elements of vicarious liability


It is obligatory for the occupier of premises to guarantee the health and security of the
individuals working there. In the given situation it was obligation of the Best Computers to
guarantee that their office premises are sheltered for its specialists. The risk appropriate in the
given situation will be direct liability on the grounds that the administration is specifically
obligated for the wounds created at their premises.

CONCLUSION
It is hoped that this report clarify its purposes of defining and demonstrating the contract and
terms and conditions of contract. It also expresses an enough illustration of negligence which is
a key fact to the contract. Whatsoever, parties involved within an agreement or contract need to
have an well understanding of contract and negligence for every day business dealings which is
mentioned in a suitable way in this report.

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The Consumer Credit Act-1974. Availabe at Accessed at 9th July, 2014.