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    Aspect of Contract and Negligence for Business


    Contract is an agreement between two parties which creates legal intention for the lawful consideration. This report explains the terms like contract and the essential elements of it. Report also explains about the topic like condition, warranty, representation through the small cases. There is difference between the contract law and the tort law which is very important to understand (Collins, 2003).


    Task 1) Different types of contracts

    Face to face contract - This contract means that the two parties who are involved in making contract should be physically present. This can be understood by one simple example, two persons X and Y are making contract over the phone and they are not present physically than this is will not be considered as the face to face contract. Contract parties can make their points that are doing the face to face contract. It is easier to understand the party with whom contract is made if they are present at the time. This contract could be oral or written. Main focus of that contract is physical presence of the parties. This type of contract is important as all the issues relating to the contract and miss understandings could be sorted out at the place only. Mostly in the business world face to face contract is preferable so that they can talk to each other easily about the contract.

    Written contract - Contract which is written in words is written contract. Written contract must be legal in the eye of the law. Illegal contracts are voidable by the law. John purchases a bike form Smith and that bike was latterly found having a mistake in the engine. John told Smith that it has some mistake; Smith said that it is not his fault (Adams, 2004). If John has written proof of purchase of bike then only he can sue Smith for the compensation. Written contract is like a written proof for the parties. Contract is important when the other party refuses to accept the damages. At that time party can sue the other party and can force the other party to perform its functions.

    Distance selling - This type of contract refers to the selling of the products in the long distance level. This could be covering the online selling now days. This includes the internet connectivity. Through different mediums like internet, advertisement parties do business and make contract from distant places. Selling could involve any thing for example clothes, bags, shoes etc. Contract of these types also have their own importance of saving time and money of other party. Presently people like to purchase online so that they can save time in shopping.

    Task 2) Essential elements required for the formation of a valid contract

    Contract definition - Contract is agreement between the two parties, creating obligation to do, to refrain from doing, a particular thing (McKendrick, 2012). Contract’s purpose is to establish an agreement between the parties. Both the parties should have essential terms of the contract that are offered and accepted by the parties, consideration, consent of the parties etc. Consideration should be legal by the parties.

    Two parties – These essential elements are very important for the formation of the contract. There will be no agreement and the contract between the parties if there is no one to make the contract. To create the offer, two or more parties are necessary. Then only the two parties will make the contract with each other. Contract will not take place if parties will not exist. So requirement of two parties is one of the essential elements of contract.

    Offer and acceptance - One party will make the offer to another party. If party wants to purchase or sell the things then it will give offer to other party. An offer is promise to the other party. New conditions may not be imposed in the offer once it is accepted by its terms. Contract does not having this term in which offers can make changes without permission of the acceptor. Both the parties should agree on the contract then only it will be legal. Illegal offers and acceptances will not be accepted by the law such as killing or injuring any person.

    Consent - After the two parties make offer and accept the contract then the consent part comes. Both the parties should agree on the terms which they have mentioned in the agreement. After the consent, parties cannot take back the agreement (MacCulloch, & Rodger, 2008).

    Lawful Consideration - Consideration must be there and it should be lawful. If one party is making offer then that party must offer a consideration. A valid contract requires valid consideration. Consideration must be given at a pre fix time by the party and if they are not fully satisfied by the other party then they may take action against it.

    Competent parties - If both the parties are making the agreement and contract then they should have the competency to perform it. Beyond the competency parties should not make the contract.

    Case A - Arnold wants to sell his dentist equipment to Fiona, at the amount of £ 15,000. Fiona could not take the advantage of Arnold’s equipment because of the shortage of the money. Arnold already told her that he is having one more party who is interested in his equipment. Fiona could not arrange the money at that time. Arnold sold the equipment to someone else. This case has the offer and acceptance and consent of both the parties but one party is not competent to perform due to lack of money (Fongern, 2010). Fiona could not do anything in that case as Arnold already told her that he has one more party waiting for the equipment.

    Case B - This case is about the rewards of £ 10 which Mrs. Smith promises to give whoever finds the cat. David sees the advertising and finds the cat. He wants to return the cat but he sped £ 15 only for the taxi. He claims £ 25 more but Mrs. Smith refuses to pay the amount. Offer and acceptance is there in the contract and parties have competency to perform the contract. Claim of extra money by David is not legal by the contract because Smith promises to pay only £ 10. If David is having extra expenses, than Mrs.Smith is liable to pay money for that.

    Case C - Mrs. Harris who is owner of three rented houses in Extown asks his neighbor Ted to collect rent. She will take the rent when she will return back from abroad. Mrs. Harris wants to give Ted £ 50 for his work but latter she refuses to pay the amount. Contract between them is only verbally Ted does not have the written proof of giving him extra £ 50. So Ted cannot do anything in this case to take the money back from the Harris (Manuel, 2011).

    Case D - Two companies Lynx Cars Ltd. and Roadster Ltd. enter into a five year agreement. Lynx Cars Ltd. was having some production difficulty due to that they were unable to deliver 2000 cars by the end of 2007. They can produce only 200 cars in that specific time and want to withdraw from the dealership agreement after competition. Clause in the agreement states that the agreement is does not intendeds to be legally binding but the parties honorably pledge that they will carry out their terms. Consideration part is not fulfilled by the Lynx cars and before the completion of the five years they withdraw their dealership.

    Task3) Contract with reference to their meanings and effects in mini-cases

    Conditions - If a condition is breached then the innocent party is entitled to end the contract. Party can claim the damages.

    Warranties - Only the damages will be considered in that and the party cannot end the contract. Warranties allow other parties to claim the financial damage but it is not allowed the party to breach the contract. This is a small term compared to the condition. The difference between that is only that in warranty you cannot end the contract but in the condition contract can be ended.

    Innominate term- This term is more favorable and flexible than condition and the warranty. Broken by serious consequences, will lead to the conditions and broken with the miner consequence will act as warranty. This term looks to the effect of the breach of contract (Anthony, 2002).

    Case E - Paul wants to purchase second hand car he went to Slick Car Sales LTD. by seeing advertisment in the newspaper. He selected a car of £3, 9995. Salesman represents a car of the 1994 Ford Mondeo. Cayman Blue: Registration Number L931 AJU. If the representation of the car is false then Paul can claim for the damages from the slick car sales company. Representation of any term is defined as the description of the product. Here, company’s sales person gives Paul description about the car. Paul has the right to claim for the damages if any of the things found false. Car selling company has the responsibility to tell the truth about the car. All the information contains the registration number, previous car owner detailed, miles of the car etc. In this case the condition is registration number and the Cayman Blue. Paul can sue the company for the financial damages. On the other hand company is also entitled to pay for the damages. Sales person from the company gives car and if a company is providing goods and services to customers than they have the right to give it correct.

    Case F- Jim went on holidays at 'Fun Park' with his family and pays £1 for parking his car. Car park is run by Stand Council and it is written "Car Park entirely at owner's risk but is covered by the overgrown shrubs. Jim pays £7 for the admission ticket in park. It is managed by Leisure Ltd. Condition at the back of ticket that company does not accept liability for death or personal injury to visitors. Jim's children were injured by the flies and he also got to know that his car is damaged by the Strand council. Here in this case Jim got damage for his wife and car. Fun Park has the responsibility of the visitor’s car; they are responsible for the damages of the car. Park is excluded from the responsibility of the visitors stuff. It was also written that they are not responsible for any damage or injuries (Barclay, 2011). Case has the warranty in that Jim can claim the park for the damages. Warranty defines the claim for the damages. Fun Park is liable for covering the damages of the Jim's car and bills of the hospitals due to injury.


    Task1) Difference between the contract law and tort law

    Contract law is enforceable in written and verbal. Breach of the contract will lead to the condition or warranty of the contract. The essential element is required by the parties for making a valid contract. Elements like consent and consideration is required by the parties. Consideration is a price given to other party. Illegal contracts are not enforceable by law for example gambling, murder, and prostitution. In contract their contractual obligation should be based on the mutual consent. Contract has the breach of agreement leading to the breach of obligation.

    On the other hand Tort law is the law of personal things. Major difference between the parties is tort law does not need of consent of parties whereas in the contract consent is required by two parties. Tort law is about one person's duty of care for another's welfare. Anybody accidently hitting other is tort (Colino, 2011). Negligence cases are based on non contractual between the parties. Parties in the tort may be know or unknown to each other. Tort law could be understood by an example. If a person is driving a car very carefully and one person from behind hit his car while going, that is tort law. Person who is driving the car is not responsible for the accident but the person who hit him is responsible for this act.

    Task2) Nature of liability in negligence and defense

    Case 1 - Donoghue v Stevenson [1932] AC562 House of Loards - In this case the manufacturing company neglects his responsibility which affects the health of Mrs. Donoghue. Case explains that how Mrs. filed a case against the ginger beer manufacturing company. Mrs. went to a cafe and had ordered ginger beer and ice cream. She was not able to see the content inside as it came in the opaque bottle. After drinking half the beer she poured the remaining beer in ice cream and decomposed snails emerged from the bottle. Donoghue suffered personal injury (Weiss, 2003). Then she sued the manufacturer of the Beer Company and successfully took the claim. This case is an example of the negligence in the manufacture company. Company was not aware about the responsibility in the drinking products. This could be very harmful for a person if they will do such kinds of mistake. This shows that company's production system is not safe. Such company is playing with the health of its customers. This negligence law gives enforcement of returning of the damages claim by other party. Parties can defense themselves with taking help of law. If individuals find something in the drink and eating packets then they can claim for the damages to the particular company.

    Liabilities in the case of negligence

    There are liabilities in case of the negligence. It is a major part of the tort law. Negligence by the business could be a cause of accident. Organization have the liability to not to neglect its duties. Filament of the duties is very much important in the law (March, 2001). It could be leading to the injuries to other persons and along with that it will also affect the reputation of the company. There are some of the elements of the negligence these are burden of proof, duty of care, the reasonable care.

    Case study 2 - This case explains about negligence of Mr. Newell in the company Coggins & Griffiths. This company is hires a person to unload the ship and because of the mistake of Newell that person gets hurt. Court has to decide that whether the company or Newell is responsible for the act of injuries. To avoid the mistakes, business need to understand tort elements so that they can reduce the number of injuries in the organization. Elements include in the tort negligence are duty, breach, causation, damages etc.

    Task3) Concepts of vicarious liability and the reasons why vicarious liability is imposed

    Vicarious liability explains when a person is responsible for the actions of other person it is also referred to as imputed Negligence. An employee and employer also get affected by the vicarious liability. Parents are responsible for the negligence act of the children. If a child has taken a car from home and the car is registered by father's name at that time if he does any harm or damage to any person, the parents is liable for the negligence (Carby-Hall, 2003). It could be understood by this, that liability that a supervisory party bears for the actionable conduct of subordinates. If an employer is taking some work from the employee and work was not performed well by the employees, in that case the person will affect work. Both are working on same thing and employer is responsible for the negligence for the employee.

    Case 2 the control test: Who has control over the activity being performed?

    Yes employer A is responsible for the injury caused to a person by its employees while these employees were performing a task on behalf of employer B. Business could not take its step back from the injuries in the organization (Gale, 2007). Vicarious explains that one person is liable for another's mistake. Superior is responsible for the subordinate’s work in the organization. Supervisor should have to keep an eye on its team and the employees because if anything is mistaken then the supervisor will be responsible for that. Doctrine of vicarious liability operates within the law of torts. It is also called "Master and Servant liability". General rule is that Newell is responsible for the duties of the employees. It is possible that injured party could be an employee or a stranger and employer could be liable for vicarious for both the parties. For this liability it is very essential to proof that employee is working under the employer or in the case of independent contractor, a contract for service.


    This report explains different types of contract and the definition of the contract. Elements are very important for the basic formation of the contract. Contract law and the tort law are totally different things. Major difference between them is contract is formed from the two parties and the tort agreement is formed by only party. Reports also explain the condition and warranty by some good case studies (Choudhury, 2010). Vicarious liability explains that supervisory party bears for the actionable conduct of subordinate. Anyone can easily understand the concept of element of tort law and the defenses available for the tort law.


    • Adams, A. K., 2004. A Manual of Style for Contract Drafting. American Bar Association.Anthony, G. 2002. UK Public Law and European Law. Hart Publishing.
    • Auvergnon, P., 2003. A comparative hypothesis of the “contractualisation” of social law. Managerial Law.
    • Barclay, L. 2011. UK Law and Your Rights for Dummies. John Wiley & Sons.
    • Bowyer, M. L., 2000. Insurance contract law and regulation and competition in the UK insurance industry: The missing link. Journal of Financial Regulation and Compliance.
    • Carby-Hall, J. 2003. The contractual nature of social law. Managerial Law.

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