Assignment Brief

BTEC Level 4-5 HNC/HND Diploma (QCF)

To be filled by the Student

Name of the Student :M. FAHAD RAHIM

Edexcel No : Registration No: COL/E-001780 Batch No:46

Unit Assessment Information

Qualification : Higher National Diploma in Business Management

Unit Code & Title : Unit 5 Aspects of Contract and Negligence for Business

Assessment Title & No’s : Aspects of Contract and Negligence for Business (Assignment 1 of 1)

Learning outcomes and grading opportunities:

LO 01: Understand the essential elements of a valid contract in a business context
Learning Outcomes AC1.1 AC1.2 AC1.3
LO 02: Be able to apply the elements of a contract in business situations
Learning Outcomes AC2.1 AC2.2 AC2.3
LO 03: Understand principles of liability in negligence in business activities
Learning Outcomes AC3.1 AC3.2 AC3.3
LO 04: Be able to apply the principles of liability in negligence in business situations
Learning Outcomes AC4.1 AC4.2

Merit and Distinction Descriptor

M1.3 M2.7 M3.1 D1.1 D2.2 D3.4

Date Issued : Date Due : 14/12/2016

Date of Submission: 28/11/2016

Assessor : Date Assessed:

Internal Verifier (IV): Date of IV:

General Guidelines

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previous page as your cover sheet and be sure to fill the details correctly.
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then be asked to complete an alternative assignment.
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reference them, using the HARVARD referencing system, in you text and any bibliography,
otherwise you may be guilty of plagiarism.
9. If you are caught plagiarising, you could have your grade reduced to A REFERRAL or at worst you
could be excluded from the course.

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I hereby, declare that I know what plagiarism entails, namely to use another’s work and to present it as
my own without attributing the sources in the correct way. I further understand what it means to copy
another’s work.

1. I know that plagiarism is a punishable offence because it constitutes theft.

2. I understand the plagiarism and copying policy of the Edexcel UK.
3. I know what the consequences will be if I plagiaries or copy another’s work in any of the
assignments for this program.
4. I declare therefore that all work presented by me for every aspect of my program, will be my
own, and where I have made use of another’s work, I will attribute the source in the correct
way.
5. I acknowledge that the attachment of this document signed or not, constitutes a binding
agreement between myself and Edexcel UK.
6. I understand that my assignment will not be considered as submitted if this document is not
attached to the attached.

Student’s Signature: …FAHAD RAHIM… Date:.…28/11/2016…

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Assignment Feedback
Formative Feedback: Assessor to Student

Action Plan

Summative feedback

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 Feedback: Student to Assessor

Assessor signature Date

Student signature Date

Task 1 (Covers LO 01 and AC 1.1, 1.2, 1.3)

1.1 Explain the essential elements of valid contract according to contract law. (AC1.1)

1.2 Discuss the types of contracts and explain their impact. Any special rules needed to be
considered.(AC1.2)

1.3 Critically analyze the terms of contract, emphasizing their meaning and effect. (AC1.3)

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 Learners are encouraged to concentrate on M1.3in order to achieve and merit grade
descriptors when addressing the above tasks.

Task – 2 (Covers LO 02 and AC 2.1, 2.2, 2.3)

Scenario 01

Mr. Shaun and Mark are the directors of the Ever Shine detergent powder company based in
London. The said directors had decided to promote a new washing powder “Ever Bright”
countrywide, hence advertised in UK news papers and other electronic medias that whoever use
Ever Shine’s washing powder and having damage to their cloths will be rewarded with GBP
1000/- and deposited GBP 10,000 with their bankers to show Ever Shin’s sincerity.

Mrs Helen was aware of the said advertisement and she purchased ever shine washing powder
from a dealer and washed her husband Mr. Robert’s office uniform and latter found that the
clothes have lost those original colours.

Then Mrs Helen wrote a letter and demanding a reward sum of GBP 1000 in terms of their
advertisement. The company refused to pay the reward since it is only an advertisement.

2.1 Advice Mrs. Helen as to how she can claim the reward. Support your legal advice with
relevant case law and with application elements of contract. (AC 2.1)

Scenario 02

Marry Gold garment is popular in manufacturing shirts in New Castle - UK. Primark fashion
chain was interested to purchase shirts for their fashions stores for Christmas season. During the
negotiation Marry Gold has sent the sample to Primark for their approval. Primark
subsequently satisfied with the sample and placed an order to supply 5000 similar shirts before
November 30th. Consideration had been discussed and finalized by parties and 10% of the total
consideration was deposited to Marry Gold’s bank account by Primark as agreed.

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Latter within the agreement time Marry Gold has supplied only 3000 shirts and sent a note to
Primark that it would supply the rest on 20th December. Further Primark found out that the
supplied shirts were not as the same quality of the sample.

2.2 Identify how the contract has been breached and the options available to Primark by
applying the types and effects of terms. (AC 2.2 &AC 2.3)

 Learners are encouraged to concentrate on M3.1 and D1.1 in order to achieve distinction
and merit grade descriptors when addressing the above tasks.

Task 3 (Covers LO 03 and AC 3.1, 3.2, 3.3)

3.1 Differentiate tort liability with contractual liability with case law. (AC 3.1)

3.2 Explain Negligence in law of tort with other concepts associating with it.(AC 3.2)

3.3 Explain vicarious liability and its role in the business context with case law.(AC 3.3)

Learners are encouraged to concentrate on M 2.7 and in order to achieve merit grade
descriptors when addressing the above tasks.

Task – 4 (Covers LO 04 and AC 4.1, 4.2, 4.3)

Scenario 03

Javis A UK car manufacturing company was looking to expand their product portfolio with
trucks to the UK market through a merger with a Chinese truck manufacturing giant Fudix thus
Javis approached Fudix.

Interested Fudix approached Kingston Associates who audits Jarvis and expressed their intention
on the merger and requested professional advice about their financial position.

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Kingston Associates recommended Fudix to merge with Jarvis to extend the business to the UK
by providing financial information in their letter headed paper, further saying that Kinston
accepts no liability from their part for given information.

Based on the information Fudixmerged with Jarvis and started manufacturing cars and trucks,
couple of months later Fudix realized that the financial position given by Kingston was not fair
and ultimately the merger failed. And now Fudix wishes to claim damages from Kingston.

4.1 Apply the rules on tort of negligence and comment whether Fudix can claim damages
from Kingston. (AC 4.1)

Scenario 04

Wetton is a cleaning contracting company with several cleaning contracts contracted with
Woolworth to clean their superstore at the end of business on a daily basis. John was employed
by Wetton and was appointed as the supervisor to conduct and oversee the cleaning team. One
day because of his car breakdown his friend gave him a lift and waited inside the store to give
the lift back home to John at a fee.

During his time in the store he helped John at his cleaning so that he can go home early. His
help ended in a disaster that he damaged one of the expensive laptops on display. John is very
much aware that nobody is allowed in to the store in any circumstances apart from authorized
cleaning company employees. Wetton holds very regular workshops with their supervisors to
make them vigilant enough about such matters.

4.2 Analyze the situation and apply elements of vicarious liability to decide whether Wetton
is vicariously liable for the action of John. (AC 4.2)

Learners are encouraged to concentrate on D3.4 and D2.2 in order to achieve distinction
and merit grade descriptors when addressing the above tasks.

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Assessment Criteria - Pass
Outcome(s)/criteria Possible evidence Achieved Feedback
LO1:Understand the essential elements of a valid contract in a business context
1.1 explain the importance Task 1.1): Explain
of the essential elements essential elements of
required for the formation valid contract
of a valid contract
1.2 discuss the impact of Task 1.2): Explain
different types of contract different types of
contracts and explain
their impact. Any special
rules need to be
considered.
1.3 analyze terms in Task 1.3): Explain terms
contracts with reference to of contract, their
their meaning and effect meaning, effects
LO2Be able to apply the elements of a contract in business situations
2.1 apply the elements of Task 2.1) Apply the
contract in given business elements of contract in
scenarios the scenario of Mrs
Helen and Ever Shine
2.2 apply the law on terms Task 2.2) evaluate the
in different contracts effect of different terms
in given scenario of
Marry Gold & Primark

2.3 evaluate the effect of Task 2.2) Evaluate the

different terms in given effect of different terms
contracts in given contracts

LO3 Understand principles of liability in negligence in business activities

3.1 contrast liability in tort Task 3.1 Differentiate
with contractual liability tort liability with
contractual liability
3.2 explain the nature of Task 3.2 Explain
liability in negligence Negligence in law of tort

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 with other concepts
associating with it
3.3 explain how a business Task 3.3 Explain
can be vicariously liable vicarious liability and its
role in the business
context
LO4 Be able to apply principles of liability in negligence in business situations
4.1 apply the elements of Task 4.1: Apply the rules
the tort of negligence and on Tort of negligence and
defenses in different comment whether Fudix
business situations can claim damages from
. Kingston Associates

4.2 apply the elements of Task 4.2 Analyze the

vicarious liability in given situation to decide
business situations. whether the company is
vicariously liable for the
action of Mr. John

Assessment Criteria - Merit

Grade Description Possible evidence Achieved Feedback
(Merit)
M1.3- an effective approach to
M1. Identify and apply study and research has been
strategies to find applied
appropriate solutions.

M2. Select/design and M2.7- appropriate learning

apply appropriate methods/techniques have been

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 methods/techniques. applied

M3. Present and M3.1- the appropriate structure

communicate and approach has been
appropriate findings. used

Assessment Criteria - Distinction

Grade Description Possible evidence Achieve Feedback
(Distinction) d

D1. Use critical 1. D1.1- conclusions have been arrived

applications to evaluate at through synthesis of ideas and
own work and justify have been justified
valid conclusions.

D2. Take responsibility D 2.2 substantial activities, projects

for managing and or investigations have been planned,
organizing activities managed and organized

D3. Demonstrate D3.4- problems have been solved

convergent/lateral/creativ
e thinking.

1.1EXPLAIN THE ESSENTIAL ELEMENTS OF VALID CONTRACT

ACCORDING TO CONTRACT LAW.

What is law?

In simple, law can be explained as a set of rules and regulations which are commonly found
in laws which are enacted (legislations) or constitutions. The main reasons for having a law is
to control and direct the behaviour of the society (Souper, 2008)

Law of contract

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In simple, a contract is an agreement which comes into play when two or more individuals
agree on something and which can be imposed by the court of law (Kumar, 2015). There are
some conditions that need to be fulfilled in order for the agreement to be enforced by court of
law. The essential elements on a contract are given below. Absence in one of the elements
can void the contract

Agreement

An agreement is analysed by the two terms that is offer and acceptance. When an individual
(offeror) offers anything to another individual (offeree) and if the offeree is interested and
accepts the offer with equivalent consideration, the commitment is said to be an agreement.

Offer

According to Baumeyer (2016) an offer can be explained as a promise in exchange for

something by the offeree. There are some conditions that can terminate an offer. An
invitation to treat is not an offer

An offer can be made by any individual who is willing to sell or buy. An invitation to treat is
simply giving the chance for anyone to make an offer.

There are some situations where invitation to treat can be applied. For example,
advertisements, displayed goods on shop shelves and a mere statement of selling price.

Advertisements

Carlill v Carbolic Smoke Ball Co.- (The case explained below is an example for an
invitation to treat and not an offer)

This case is about the Carbolic Smoke Ball co. They are the manufacturers for these carbolic
smoke balls. They advertised in many newspapers stating that a reward of £100 will be given
to any individual who uses these smoke balls as told that is three times a day for two weeks
and still contracts the influenza, flu or any other deceases. They showed their sincerity by
depositing £1000 in the relevant bank. Mrs. Carlill who saw the advertisement placed in the
newspaper purchased these carbolic balls and used them as directed. After using these smoke

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balls, she caught flu and wanted to claim the reward stated by the company. The Carbolic
Smoke Ball co. refused to pay Mrs. Carlill by arguing to show that the advertisement placed
by them was a mere invitation to treat and not an offer (Singha, 2012).

Displayed goods on shop

Fisher V Bell- (The case explained below is an example stating that goods displayed
on the shelves of shops are not considered as offers)

The case explained below is an example stating that goods displayed on the shelves of shops
are not considered as offers. This case is about a shop keeper who was declared to be guilty
for offering a flick knife for sale in his shop window. The shop keeper appealed and was
successful by doing so. At first, the judge knew that it was an invitation to treat because
goods displayed on the shelves of shops are not considered as offers (Saxena, 2015)

A mere statement of selling price is not an offer

Harvey Vs. Facey- (A mere statement of selling price is not an offer)

This case is about a land for sale and concluding that a mere statement of selling price is not
an offer. Harvey sent a telegraph to Facey (Defendant) saying “will you sell Bumper Hall
Pen? Telegraph the lowest price”. In return Facey replies “lowest price is £900”. Then
Harvey replied saying “we agree to buy Bumper Hall Pen for £900 as you asked”. However,
it was held that it was not an offer because mere statement of selling price is not taken as an
offer. It was not proven anywhere that Facey was willing to sell that property to Harvey for
the price quoted (Ranasinghe, 2011).

Acceptance

A binding contract is formed, only when a there is a valid acceptance. There are 4 rules that
need to be considered.

Rule 1 -says that acceptance will be effective only when the offeror receives the message
from the offeree. The case Entores v Miles Fast East explains it in detail. The claimant that is
Entores who was in London made an offer to buy 100 tons of cathodes from Miles Fast East

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(defendant) through Telex who was at Holland. The acceptance made by Miles Fast East was
received in the Telex machine which was in London. The question that arose at the court was
what point of contract came into play. The Dutch law will be applicable if the acceptance was
effective from the time the message was sent. The English law will come into play if the
acceptance was taken place when it was received in London. Then it was held that the
acceptance needs to be communicated to the offeree for it to be an effective acceptance
(Sharma, 2014).

Rule 2 - is Silence as acceptance. Minimum word is “yes”. The case of Felthouse v Bindley
explains it. This case is about the purchasing of a horse from his nephew. Uncle named Paul
Felthouse (offeree) wanted to purchase a horse from his nephew John Felthouse (offeror).
The nephew had written to his uncle about a previous discussion in purchasing a horse and
the uncle replied to that letter saying “If I hear no more about him, I consider the horse mine
at £30 and 15s”. The reason the uncle did not hear from him was because the nephew was
busy dealing with auctions on his farm. William Bindley, the person running the auction was
told not to sell the horse, but by accident he did. The uncle sued Bindley. In order for the
uncle to say that he owns the horse, he must prove that there was a valid contract. Bindley,
stated that there was no communication about the acceptance of his uncle’s offer. The court
held that there was absence in contract because silence cannot be taken as an acceptance
(Vansluytman, 2011).

Rule 3 - Acceptance must be communicated by offeree or authorized agent. This case is

based on an applied job as a head teacher. Powell (claimant) v Lee (defendant). The claimant
had applied for a post as a head teacher. The managers in the school decided to appoint
Powell where as one manager who didn’t have the authority had told the claimant that he was
appointed. The other managers reexamined and appointed another individual. The claimant
acted against it for breach of contract. The court held that there was no existence in a contract
because of an unauthorized message of the school's intention to hire the claimant (Lam,2013).

Rule 4 – this rule states that cross offers amount no acceptance. The post will explain this
case in the post:

X: I am willing to buy your car for $ 5000

Y: I am willing to sell my car for $ 5000.

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  What needs to be understood is that there is no acceptance, only two offers from
both individuals

Consideration

According to the Law Handbook (2015) consideration can be stated as the price given out for
the promise made by other individual. When talking about price, it doesn’t have to be money,
but need to hold some sort of value. For example, interest or benefit. In simple, both parties
who are involved must promise to give something to the other party.

Executed consideration

In simple it is when a guarantee is given to perform an activity. For example, if we go to a

baker and ask him to make a birthday cake, for the service he provides we give him an
advance. The payment given to the baker is called executed consideration.

Executory consideration

This type of consideration is when a guarantee or promise is made for a future activity. For
example, mutual promises.

The case of McArdle

This case about Ms. Majorie McArdle who made some repairs and improvements on her
lodge. The brother and sister signed on a document saying that the repairs can be carried out
and that the architects will pay an amount of £480 from the proceeds of sale. The document
was signed after all the work has been done. The payment was never made and the court held
that since the consideration was made before the promise of payment, therefore the promise
for payment was not bound. Thus, resulting in past consideration which is invalid (University
of Nairobi, 2016).

Intension to create legal relations

The parties who are going to create legal relations should have an intension to make a legal
and valid binding agreement. When the contract is being agreed both parties must agree that
if any party does not fulfil the promise, the opposite party is permitted to file a case. The
agreement can be broken down to two main sub agreements

Domestic Agreement

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Domestic agreement can be explained as the agreements or contracts done among friends and
members in the family or anyone known. In a case like this, the court assumes that the
intension to create a legal binding agreement is not present. The case about Balfour v Balfour
will explain this scenario (Law Teacher, 2016).

Balfour v Balfour

This case is about this couple who went to London from Ceylon on holiday. When the
holiday came to an end, Mr. Balfour had to report to work back in Ceylon, but his wife had to
stay back due to the doctor’s advice. When the husband was about to leave, he promised to
her that he will compensate an amount of £30 monthly until she returns to Ceylon. The
husband failed to fulfil his promise and the wife sued him for this reason of not paying the
money. The court held that since the husband and wife had a domestic agreement, the
promise made by the husband was not binding (Townsend, 2015).

Merritt v Merritt

This case is another example for domestic agreement. In this case, the husband splits up with
his wife and comes to an agreement to make arrangements for the future. The husband agreed
that he will pay £40 to pay the mortgage for the house. Secondly, he mentioned that he would
transfer the house to his wife’s name after the full amount for the mortgage was paid. All this
was written and signed but later Mr. Merritt refused to transfer the house. The court held that
at the time of the agreement, Mr and Mrs Merritt were not living together and must have
planned the agreement for the binding because they planned it according to their future
(Lindsey, 2015).

Simpkins v Pays 

This case is about a boarder, grandmother and her granddaughter. They agreed and entered
into a competition on the weekly papers which was held by the Sunday Empire News. The
puzzle was solved and the slip was sent in the grandmother’s name. they took turns in paying
every week. They came to an agreement that if anyone wins the prize, the cash prize should
be shared among the others due to their involvement. The grandmother won the cash prize
and got an amount of £250. Then she refused to share it with the other two. The boarder
wanted to claim her share and when to the court, and the court held that there was a binding
contract against the family connection because the boarder was also involved in the contract.

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This disproved the assumptions of the court of no intension to create legal relations (Kumar,
2011).

Capacity

Businesses who enter into contract with their customers on a daily basis gives a positive
effect on the long-term growth and profitability of the organization. But some individuals are
not capable of entering into contract. In general, individual who are at the age of 17 or below
are not capable or lack the capacity of entering into some contracts. Mental disabilities can be
taken as another example for lack in capacity to enter into contract. (Bradley, 2016).

Nash V Inman [1908]- (The case mentioned below is stating that not everyone can enter into
a contract).

In this case, a tailor gave eleven waist courts to a Cambridge undergraduate when Inman had
enough. The tailor sued this undergraduate for not paying the money. Since this
undergraduate did not have the capacity to enter into the contract, the court held that since the
undergraduate did not have the capacity, he does not have to pay the amount (Henderson,
2015).

Consent

For a contract to be legally binding, both parties must freely be willing to do so. This is an
important element in the law of contract. The free willingness to enter into a contract can be
called consent. One party must not force the other party to enter into the contract as it will not
be legally binding.

Legality

This means any two parties who are entering into a contract should not make any deal which
is against the law of the country. For example, A can sell drugs B. The drugs are illegal in
that country. So, if any one of the parties want to sue the opposition for not performing their
act respectively, he cannot do so, because the contract is not legally approved.

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1.2DISCUSS THE TYPES OF CONTRACTS AND EXPLAIN THEIR
IMPACT. ANY SPECIAL RULES NEEDED TO BE CONSIDERED.

Informal contract- An informal contract is a contract which is not recognized or a

negotiable instrument. The force of this contract is gained through the existence of a
transaction and not by the presence of any rule or regulation. An informal contract can be
either written or unwritten (USLegal, 2016).

Formal contract- this form of contract is usually in written form and stating that the two
parties have agreed, and that it is observed to be legal and enforceable by the court of law. All

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formal contracts must carry an offer and acceptance. In conclusion, any written contract can
be stated as a formal contract. Some examples for written contracts are Bills of exchange

• Cheque & Promissory notes

• Contracts of Marine Insurance
• Transfer of shares in a company
• Legal assignments of debts

Bilateral contracts- Unlike other types of contracts, a bilateral contract is based on promises
that may take place immediately or later. The key element in this contract is that both parties
are benefitted equally. A bilateral contract is a two-way contract. Most business deals are
bilateral contracts.

Unilateral contract- This contract is the opposite of a bilateral contract. This is a one-sided
contract. In this contract, only one party decides to act upon their duties or responsibilities
without a guarantee that the other party will perform theirs. Since this contract will come into
power only when the other party performs their duty, this contract is not used much.

Unenforceable contract- An Unenforceable contract can be simply explained as a contract

which cannot be applied by the court of law. The reason behind this is because the terms in
the contract are arguable.

Voidable contract- Like most contracts, this contract can be enforced by the court of law and
it is a legal contract. In most cases, only one party is guaranteed to this contract term, and the
unbound party can cancel the contract. Thus, resulting in a void contract (Ranjan, 2012).

Executed contract- The party who is needed for the contract to be effective signs off the
legal document

Executory contract- This type of contract is set by two parties with the intension of fulfilling
its terms in the future. Before the contract becomes fully executed, the two parties must
perform their acts. There are some types of executory contracts like rental lease and car lease
(Legal dictionary, no date).

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1.3CRITICALLY ANALYSE THE TERMS OF CONTRACT,
EMPHASIZING THEIR MEANING AND EFFECT.

Terms of a contract

Clauses or terms are the elements which form a contract. Various terms are included in a
contract. Contracts are of two kinds and they are expressed terms and implied terms. These
two kinds can be further broken down to warranty, conditions and innominate terms
(Weitzenbock, 2012).

Expressed terms- The parties themselves lay down these terms. The terms that they agree
upon can be mentioned orally, in written form or even both.

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Implied terms- these terms are fed into a contract by the court depending on the type of
agreement and party. In general, the terms of a contract can be either communicated verbally,
written or both.

The Moorcock case

This case is about the claimant who owns a ship and wanted to anchor it close to the shore of
river Thames. This is a flowing river and at times the ship makes contact with the river bed,
thus resulting in damage to the ship due to rocks and other sharp particles in the shore. Due to
this reason, the plaintiff wanted to claim the damage caused by this. But the defender
reasoned that there was nothing mentioned about the condition of the river bed. The court
mentioned that an anchoring a ship should be safe. This term added was the business efficacy
term which gives priority to contract business effect (Robertson, 2016).

Liverpool City Council Vs Irvin

This case is about a flat where the courts implied a term. A flat was owned by the Liverpool
City Council in which the renter was the defendant. The lift, stairs and other common parts in
a flat needed repair. A rent strike took place by most of the renters living there because the
repairs were not made. The agreement did not mention any obligations about any repairs.
This case was taken to the courts and the renter (defender) asked the courts if a term can be
implied so the council will have an obligation to repair the common parts in the flats. The
court came to conclusion by implying a term stating that the landlord (Liverpool City
Council) should take responsibility in maintaining the common parts of a flat (Glaze, 2014).

There are three types of terms and they are as follows;

Condition- A condition can be said to be the main term in a contract. In any case, if any of
the parties breach the condition, the other party can stop or end the contract and claim
damages for the breach.

Poussard Vs Spiers (1876)

This case is about Madame Poussard who got in a contract with Spiers where they wanted her
to perform as an opera singer for a five-day concert. Five days before the main event,
Madame Poussard fell ill and couldn’t make it for the first four days of the concert. Spiers

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substituted Madame Poussard with someone else as she didn’t attend the concert. The court
held that since Madame Poussard breached the root of the contract, Spiers was eligible to end
the contract and claim the damages (Robertson, 2016).

Warranty- A warranty term/s can be the minor terms that support or fit into the contract.
Since warranty terms are not the existence of a contract, if these terms are breached the other
party can claim for the damages, but cannot end the contract (Hambly, 2015).

Bettini Vs Gye (1876)

This case is about Bettini who got in a contract with Gye where they wanted him to perform
as an opera singer for three months and come for rehearsals six days before the concert. six
days before the main event, Bettini fell ill and couldn’t make it for the rehearsals. Gye kicked
out Bettini and brought in someone else as he didn’t attend the rehearsals. The court held that
since Bettini didnt breached the root of the contract, Gye was not eligible to end the contract
(Lew, 2015).

Innominate- Some terms which exist in a contract are hard to distinguish if it’s a conditional
term or warranty term. In such cases the court will call these terms as innominate terms.
Depending on the scenario, the court will say if it can be considered as warranty or condition
terms and give judgements accordingly (Ford, 2016).

Hong Kong fir shipping co ltd v Kawasaki Kisen Kaisha ltd 1962

In this case, a ship was hired to the defendants for a time of 2 years. In the agreement, it was
stated that the vessel will be will be in good condition to sail the sea throughout the 2-year
period. Due to a problem in the engine, the ship was out of out of service for 20 weeks in
total. The defendants took this a breach in the root of the contract. The claimant argued that
the term seaworthiness cannot be taken as a condition in the contract.

Exemption clause

An exemption clause can be mentioned as a section in a contract which appears to exclude

any form of responsibility that will lead to an end in the contract. Most parties use this clause
as a technique to get away from responsibility (Wimsatt, 2014).

The case mentioned is an example for this clause.

Olley v Marlborough Court [1949] 1 KB 532

22 | P a g e
In this case, the claimant booked a hotel and made the contract at the reception desk. The
receptionist did not mention anything about the exemption clause. The exemption clause was
pinned behind the door of the claimant’s room which stated that any hotel is not responsible
for any missing or damaged valuables. The claimant had left her fur coat in the room and
went out. By the time she came back, her fur coat for missing. It was held that contract was
incomplete because the notice was purposeless even though the contract had been made
before the claimant could see it. (Robertson, 2016)

2.1 ADVICE MRS. HELEN AS TO HOW SHE CAN CLAIM THE

REWARD. SUPPORT YOUR LEGAL ADVICE WITH RELEVANT

CASE LAW AND WITH APPLICATION ELEMENTS OF CONTRACT.

This scenario is about the detergent company named Ever Shine which is located in London.
The directors of this company decided to launch in a new product named Ever Bright to the
whole country. This product was advertised in every electronic media and in the newspaper.
The advertisement stated that if the clothes get damaged due to this Ever-Bright detergent the
individual will be rewarded with £1000. Mrs. Helen tried this new detergent and noticed that
her husband’s clothes were not the original colour. Therefore, she wrote a letter regarding this

23 | P a g e
issue and wanted the money they promised to compensate, but the company refused stating
that it was just an advertisement and not an offer.

The case mentioned below can be related to the case of Carlill vs Smoke Ball Co. In this case,
a lady named Carlill who bought a product (Smoke balls) which was advertised on the
newspaper stating that, if the product is consumed as per the directions, the individual will
not get influenza and by any chance if that individual catches influenza, the company will
compensate an amount of £100. Unfortunately, Mrs. Carlill caught the influenza after
consuming this product and wanted the money they agreed to compensate. The company
refused to give the money and for this reason she sued them. Mrs. Carlill argued and stated
that the advertisement contained a reward which was made available to anyone who saw it.
The defendant’s appeal was not considered because the court agreed to Mrs. Carlill. The
court held that since the advertisement had a reward, it is considered as an offer and therefore
Mrs. Carlill won the case.

Conclusion.
Since the court has come across a case similar to the scenario mentioned above, the final
word that was given by the judge in the case of Carlill vs Smoke Ball Co was that all
advertisements are not offers, but this case is exceptional because it had a reward attached to
it. Hence it was concluded that this advertisement must be considered as an offer and Mrs.
Carlill had won the case. The same implies to this scenario. Since there is a reward attached
in the detergent advertisement this too will be considered as an offer. It can be decided that
Ms. Helen will win the case by that statement.

2.2 IDENTIFY HOW THE CONTRACT HAS BEEN BREACHED AND

THE OPTIONS AVAILABLE TO PRIMARK BY APPLYING THE
TYPES AND EFFECTS OF TERMS.

The term that can be implied for the given scenario can be the condition term. A condition
can be said to be the main term in a contract. In any case, if one of the parties breach the
condition term of the contract, the other party can stop or end the contract and claim damages
for the breach. A warranty term/s can be the minor terms that support or fit into the contract.

24 | P a g e
Since warranty terms are not the existence of a contract, if these terms are breached the other
party can claim for the damages, but cannot end the contract (Hambly, 2015).

The scenario
Primark is a fashion chain who was interested in purchasing some shirts from a popular
manufacturer in the UK named Marry Gold Garment. The manufacturer sent a sample to
verify their quality. The quality was up to Primark’s standard and they ordered a quantity of
5000 similar shirts to be sent before the 30th of November as they wanted it for the Christmas
season. 10% of the total amount was deposited to Marry Gold’s account.

Breach of warranty- The manufacturer had only sent 3000 shirts before the 30th of November
when they were asked to send 5000 shirts before November. The remaining will be sent on
the 20th of December which will be of no use to Primark as their main aim for to sell them for
the Christmas season, but still this cannot be taken as a conditional breach.
Breach of condition- The quality of the sent shirts was not the same quality as the sample.
Due to this reason, Primark won’t be able to sell any shirts as the quality is not up to their
standards.

The case that can be related to this scenario is the case of Poussard Vs Spiers (1876). This
case is about Madame Poussard who got in a contract with Spiers where they wanted her to
perform as an opera singer for a five-day concert. Five days before the main event, Madame
Poussard fell ill and couldn’t make it for the first four days of the concert. Spiers substituted
Madame Poussard with someone else as she didn’t attend the concert. The court held that
since Madame Poussard breached the root of the contract which is not attending the first day
of the concert, Spiers was eligible to end the contract and claim the damages (Robertson,
2016).
Conclusion

Coming to a conclusion that since this case is similar to the given scenario, the court will
support Primark and conclude that Marry Gold Garment has breached the root of the contract
and Primark is eligible to end the contract and claim the damages for their loss.

3.1 DIFFERENTIATE TORT LIABILITY WITH CONTRACTUAL

LIABILITY WITH CASE LAW.

25 | P a g e
 Tort liability

The legal term that describes the abuse, injury or damage one party does to the other can be
stated as the law of tort. The abuse or violation that one party does can be done intentionally
or due to negligence. If an individual is injured, the person responsible for his/her injury
should compensate (Walker, 2010).

According to Kiptoo (2014) duty of care is the responsibility an individual has towards the
general public. If any of the acts do not meet the standard requirement of a person, it is said
be a negligent act. Damages caused by negligence can be claimed in a lawsuit.

Donoghue v Stevenson [1932]- (an example the duty of care.)

In this case, Mrs. Donoghue went to a café with her friend to have some ice cream. Her friend
brought her an ice cream along with a ginger beer. The bottle in which the ginger beer comes
in is in a non-transparent bottle so the content inside is not visible. Mrs. Donoghue poured
half of the bottle and consumed it. Then she poured the rest to her glass and found and out
came a rotten snail and this made Mrs. Donoghue sick. She wanted to claim against the
manufacturer of the ginger beer. After this case, the court brought in an improved version of
the law negligence and fixed a neighbour test (Lawgovpol, 2014).

Olley v Marlborough Court [1949] 1 KB 532

In this case, the claimant booked a hotel and made the contract at the reception desk. The
receptionist did not mention anything about the exemption clause. The exemption clause was
pinned behind the door of the claimant’s room which stated that any hotel is not responsible

for any missing or damaged valuables. The claimant had left her fur coat in the room and
went out. By the time she came back, her fur coat for missing. It was held that contract was
incomplete because the notice was purposeless even though the contract had been made
before the claimant could see it.

The difference between contractual liability and liability of tort.

  Contractual liability Tort liability

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Relationsh The relationship is created and governed The relationship is non-
ip by the contract. The parties enter the contractual and is imposed by
between relationship by law. The defendant must owe
the parties mutual consent. the claimant a duty of care.

Nature of The parties must comply with the terms The defendant must act
obligation of the contract. according to the standard of
care expected of the
reasonable man or the
reasonable professional.

Causation If the loss is a normal result of the The defendant’s negligence

and breach, the defendant will be liable; if the must cause the claimant’s loss
remotenes loss is not a normal result of the breach, and the loss must have been a
s the defendant will only be liable if they foreseeable consequence of
knew of the unusual circumstances. the breach of duty.

Measure The aim is to compensate the claimant The aim is to compensate the
of by putting them in the position that they claimant by putting them in the
damages would have been had the contract been position that they would have
performed. been had the negligence not
taken place.

Possible Damages may be reduced by the amount Damages may be reduced by

reduction that could have been mitigated if the the relevant percentage if the
of claimant fails to take reasonable action claimant’s conduct contributed
damages to mitigate the loss. to the loss.

Table 1. Difference between liability of tort and contractual liability. Source (ACCA, 2016)

3.2 EXPLAIN NEGLIGENCE IN LAW OF TORT WITH OTHER

CONCEPTS ASSOCIATING WITH IT.

Negligence
Speaking in general terms, Reuters (2016) says that any individual or company who acts in a
careless way which harms another party can be stated as negligence. The person responsible
for the careless act will have to pay for the damage caused by him. For a claimant to win the

27 | P a g e
negligent case, he/she must prove to the court the elements in the tort liability equation. This
will prove that the injury was caused due to the defendant’s negligence.

Duty of care + Breach of duty + Damage = Tortuous Liability

Donoghue v Stevenson [1932]
In this case, Mrs. Donoghue went to a café with her friend to have some ice cream. Her friend
brought her an ice cream along with a ginger beer. The bottle in which the ginger beer comes
in is in a non-transparent bottle so the content inside is not visible. Mrs. Donoghue poured
half of the bottle and consumed it. Then she poured the rest to her glass and found a rotten
snail and this made Mrs. Donoghue sick. She wanted to claim against the manufacturer of the
ginger beer. After this case, the court brought in an improved version of the law of negligence
and fixed a neighbour test (Lawgovpol, 2014).
In order to prove that the ginger beer company owed duty of care to Ms. Donoghue, she must
prove that the ginger beer company is her neighbour. A neighbour is someone who is closely
and directly (proximity) affected by the individual’s act and the reasonable foreseeability of
that act no to have happened. There was proximity because Ms. Donoghue drank it and that
affected her directly. The reasonable foreseeability can also be proven because if the ginger
beer company had been more careful and clean, this act would not have happened. They
breached the duty by not being clean. The damage is that Ms. Donoghue fell sick after
drinking that drink. Ms. Donoghue won the case and claimed the damages.

Caparo Industries pIc v Dickman [1990]

Caparo industries bought some shares from Fidelity plc because it was stated in their
accounts that they had made a pre-tax profit of £1.3M. The reason they bought shares is
because they trusted the accounts that they had shown. But the actual state of the company
was in a loss of over £400,000. Caparo wanted to claim damaged against the auditors because
they had been negligent in certifying the accounts.

The court held that there was no duty of care. The proximity of the neighbour was not
sufficient. The court came to that conclusion because the auditors didn’t know that there was
a company named Caparo and for what reason the information they provided will be used.
But the court stated that there was sufficient proximity due to reasons. The foreseeability was
also proven because, if auditors had given the right information, Caparo would not have

28 | P a g e
invested in more share. This case brought in another element and that is Fair, just and
reasonable to impose a duty. This new element was also present for this case. Since all the 3
elements were proven, Caparo won the case (Fatima, 2014).

3.3 EXPLAIN VICARIOUS LIABILITY AND ITS ROLE IN THE

BUSINESS CONTEXT WITH CASE LAW.

Vicarious liability

This principle says that an individual can be responsible and accountable for the act of
another person. The person held accountable may be innocent, but is liable because due to his
negligence, that wrongful act happened. For example, if a father lets his son to drive a car and

29 | P a g e
the son meets with an accident, the father is held responsible as he let the child drive and
because he owns the car (FindLaw, 2016).

This principle is common in an organization because employers are usually held accountable
for the employees’ acts. The cases mentioned below will explain more about vicarious
liability

Century Insurance Co v NIRTB [1942]

In this case, Davidson a truck driver was employed at the NIRTB. He was transferring the oil
from the tank to the underground storage in a petrol station. While the oil was being
transferred, Davidson lit a cigarette and threw the match stick. This act caused an explosion
in the station and destroying it. The petrol station wanted to claim the damages for this
negligent act from their insurance company, but they refused to do so. This case was taken to
courts and they held that NIRTB was vicariously liable because the driver lit the cigarette at
the time and place of employment even though the act was negligent (Kelly et al. 2011).

Limpus v London General Omnibus Co [1862]

This case is about a bus driver who was racing with his rival to the bus stop to collect the
passengers first. It was clearly mentioned in the instructions stating that driving very fast
should not be done at any cost. Due to the high speed, the bus driver lost control and ran into
the passenger queue and injured them. The court held that company was vicariously liable
and not the driver because this act took place at the time of employment even though the bus
driver was given strict instructions about not to drive very fast (Matter, 2013).

Rose V Plenty [1976]

This case is about a milkman who took a thirteen-year-old boy to help him in his work when
it was clearly told not to take children to get help with their work. During this time, the boy
got injured and sued the milkman and the dairy company. The court held that the employer is
vicariously liable because the incident took place at the time of employment (Venkatachalam,
2013).

Daniels v Whetstone Entertainments Ltd [1962]

This case is about Mr. Daniels who went to a nightclub named Whetstone Entertainments
Ltd. Due to excess alcohol consumption, Daniels misbehaved inside the nightclub. The
bouncers beat Daniels and sent him from the premises. Once he was thrown out, the bouncer

30 | P a g e
assaulted him. This act took place outside the nightclub. Once this case was taken to the
courts, the court held that the night club was vicariously liable for the damage the bouncer
caused inside the premises but not for the assault since that took place outside the scope of
his employment (Swarbrick, 2014).

The case mentioned below is not an example for vicarious liability because the negligent act
that caused Hilton’s death was outside the scope of his employment. So the claimant claim
for the damages.

Hilton v Thomas Burton (Rhodes) Ltd [1961]

Hilton was an employee working at a building contracting company. One day during his
lunch break, he went to the pub with his fellow workers in the company van. Due to the
negligent driving, the van crashed and killed Hilton who was a passenger. Hilton’s wife sued
the company saying that they are vicariously liable for this accident. The court held that he
was "on a frolic of his own". This means since the negligent act that caused Hilton’s death
was outside the scope of his employment the employer cannot be held vicariously liable
(Harpwood, 2005).

4.1 APPLY THE RULES ON TORT OF NEGLIGENCE AND

COMMENT WHETHER FUDIX CAN CLAIM DAMAGES FROM
KINGSTON.

The scenario in the given question is about a car manufacturing company in the UK named
Javis. They decided to expand their product portfolio with trucks and approached Fudix who
is a Chinese truck manufacturing giant and wanted to merge with them. Fudix agreed to do so

31 | P a g e
and approached Kingston Associates Who Audits Javis to get professional advice on Javis’s
financial position and if it is safe to merge with them.

Then, Kingston advised them to merge with Javis by giving them the relevant information for
them to expand their business in the UK. In their letter headed paper it was further said that
“Kingston accepts no liability from their part for given information.”

After going through the information provided by the audit firm, Fudix merged with Javis. A
few months later, Fudix realized that the given information about the Financial position of
Javis was not fair and failed to merge and wanted to claim damages from Kingston.

For Fudix to claim damages they have to establish the tort liability equation

Duty of care + Breach of duty + Damage = Tortuous Liability

Duty of care (establishing neighbour = proximity, reasonable foreseeability and fair just and
reasonable)

Proximity = The information given by Kingston directly affected Fudix as they approached
Kingston and expressed their intension to merge with javis.

Reasonable foreseeability = If Kingston had provided the true information about the financial
position of Javis, Fudix would have not merged with Javis.

Fair just and reasonable = It is fair just and reasonable for Fudix to claim damages from
Kingston

Breach of duty

Kingston breached their duty by not giving the right information about Javis to Fudix

Damage

The time, capital invested and labour and effort are the damages caused due to the wrong
information provided by them. Since the whole equation can be established by fudix they can
claim damages.

Hedley Byrne & Co Ltd v Heller & Partners Ltd, [1964]

32 | P a g e
A similar case related to this scenario is the case of Hedley Byrne & Co Ltd v Heller &
Partners Ltd, [1964]. This case is about an advertising firm named Hedley Byrne & Co Ltd
who wanted advice from Heller & Partners Ltd (National Provincial Bank) about extending
credit to a customer named Easipower. They wanted information about their financial
position and credit worthiness. Then Heller & Partners Ltd advised them in letter saying that
they can extend the credit for Easipower. There was an exemption clause stating “without
responsibility on the part of bank”. Right after they extended the credit, Easipower ran out of
business and this incurred a loss to Hedley. Hedley sued Heller claiming that the information
was given negligently and was misleading and wanted to claim damages for it.

The tort liability equation was established by Hedley Byrne & Co Ltd and the court of law
agreed to it., but due to the exemption clause which stated that the bank is not responsible for
any given information, Hedley Byrne & Co Ltd could not claim for damages (Learneddan,
2013).

Conclusion

However, coming to a conclusion that since there was an exemption clause in the letter that
Kingston had send to Fudix stating that they are not liable for any information given by them,
Fudix will not be able to claim any damages and Kingston will win the case.

4.2 ANALYSE THE SITUATION AND APPLY ELEMENTS OF

VICARIOUS LIABILITY TO DECIDE WHETHER WETTON IS
VICARIOUSLY LIABLE FOR THE ACTION OF JOHN.

33 | P a g e
The below mentioned scenario is about a cleaning contracting company named Wetton who
contracted with a supermarket named Woolworth to clean their store every day after their
store closes. John was a supervisor employed at Wetton to oversee and conduct the cleaning
team. One day because John’s car broke down, his friend gave him a lift and wanted to drop
him back, so he stayed at the store and helped john so that he could finish the work faster and
get home early. The help given by his friend ended in a disaster because he broke one of the
laptops in the store. It was clearly mentioned to John that only authorized personal can enter
the store to clean it.

The case mentioned below is similar to the scenario mention above. The decision that is taken
in this case will be the final word given to the scenario of Wetton and Woolworth. In the case
of Rose V Plenty [1976] a milkman took a thirteen-year-old boy to help him in his work
when it was clearly told not to take children to get help with their work. During this time of
employment, the boy got injured and sued the milkman and the dairy company. The court
held that the employer is vicariously liable because the incident took place at the time of
employment even though it was the employee’s mistake (Venkatachalam, 2013).

Conclusion
Since that was the final decision made by the court, we can come to a conclusion that Wetton
will be vicariously liable because the laptop broke at the time of employment. Woolworth can
sue Wetton as they are vicariously liable and claim for the damages.

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