The given essay is aimed to discuss the aspects of contract and carelessness for business typical for the UK business activity. Thus, the paper will uncover the essential elements of a valid contract in a business context and the realisation of the elements of a contract in business situations, as well as the statutes of obligation in carelessness in commercial activities and their realisation.
In particular, the essay will provide the explanation of the importance of the essential elements required for the formation of a valid contract, discussion of the influence of various types of agreement, as well as analysis of conditions of the agreement supported by their definition and influence on the business aspects. Moreover, the essay will provide a brief explanation of contrast liability in tort with contractual obligation and explain the nature of obligation in carelessness, as well as the aspects of vicariously right. The case studies presented for the discussion will become an excellent chance to show how the studied principles can be applied in practice.
Task 1 The Essential Elements of a Valid Contract in a Business Context
The Formation of a Valid Contract
Considering the situation occurred between James and Maria, it is relevant to note that the agreement they have had cannot be called a valid contract because most probably it will be concluded in a verbal form but not the written one. The contract can be concluded orally, in writing or any other way in case the existing law does not provide for a mandatory form of the contract. If a verbal agreement is reached by a mutual exchange of expression and the contracting parties are willing to make the agreement legal with an obligatory value, it is concluded an oral agreement. However, not all agreements achieved in the course of social communication are legal. The agreement is considered a contract in case it provides the parties with a legal force. At the same time, the law does not establish an oral form for any of the transaction. This is the reason James and Maria should conduct a contract to make an agreement legal.
Each contract, either verbal or written, consists of three basic elements. To make the contract valid, it must contain basic elements. The contract is considered invalid in case of absence even of the three basic elements that form the contract. The three components are an offer, acceptance and consideration. Offer can be either verbal or written, made by one of the parties to take any action in the interests of another party in exchange for an adequate consideration. Acceptance is consent of a party to accept the obligations under the contract by virtue of the acceptance of the proposal, both in writing and verbally, and pay out a commensurate consideration. Consideration is a material basis of the contract, which means a specific material value provided in return for certain types of activities or the promise for such an activity.
The following circumstances support the legality of the contract that has been concluded between the parties involved. There are capacity, duress, form, fraud, legality and mutual mistake (Finch & Fafinski 2014).
Types of Contracts
There are five main types of a contract that may be entered in the United Kingdom by individuals and businesses. These are one-sided agreement, reciprocal treaty, and contract under a seal, simple agreement, as well as a contract form. A contract form is developed in accordance with the rules of the document containing the language versions of a particular type of contract conditions. It can be any contract outlining the terms and conditions of purchase or sale of goods or services. A one-sided agreement is the loan agreement, for instance. In this case, the borrower is an obliged party, while the lender has the right to demand repayment from the borrower but has no obligation. An example of reciprocal treaty is a rental contract. According to it, the landlord is obliged to provide an item for the use, while the tenant must pay a house rent at the end of the contract term. The tenant also must return the item in a good condition at the end of the contract agreement. The contract under seal is a document or agreement signed out and sealed by two or more parties, while simple agreement is not sealed and, therefore, is less powered compared to the agreement that is under seal (Finch & Fafinski 2014).
Other Terms Included in a Valid Contract
Apart from the main elements of a contract and the circumstances that support a legal aspect of the contract, there are express, implied and innominate terms, conditions and warranties that form the basis of the contract and make it legal. Thus, express terms of the contract are conditions that are actually stipulated in the agreement. Implied contract terms are conditions arising from fixed terms or granted of sound mind, from the regulations, adopted standards, etc. The contract may provide for compensation for the loss. Innominate terms may be any terms decided to be included by the parties signing out the agreement. These are usually called Force majors. Conditions and warranties outline time frames and written agreements the parties have decided to come up with when concluding the contract, as well as the penalties, occurred in case any of the parties will be not in compliance with the conditions of the contract (Finch & Fafinski 2014).
Task 2 The Elements of a Contract in Business Situations
Contract for Sale of Goods
This agreement shall be made in sympathy with the Seller’s verbal proposal including all material terms and conditions of this agreement and the previous achievement of a complete agreement between Buyer and Seller with regards to all material terms and conditions of the contract, proof of which is the conclusion of the agreement.
The parties have concluded an agreement that includes the following:
- The subject of the contract. The Seller is obliged to transfer ownership of the goods under this agreement and the Buyer is obliged to pay a full cost by providing a pre-payment and accept the good. The name, quantity, range, price of delivered goods is specified in Appendix, which is an integral part of the contract.
- The right of third parties to the goods. The Seller tells the Buyer that the subjected product of the contract is the property of the Seller. The Seller informs the Buyer in a proper way that the product subjected to the purchase and sale is not pledged or burdened with other commitments.
- Quality. Qualitative characteristics of the goods must meet the state standards applied to the UK territory for the related product category. The Seller shall pass the Buyer of goods and all the related documents to him, preserve the product by preventing its deterioration before selling it, as well as transfer the goods to the Buyer in the amount, quality, range and completeness in accordance with the act of acceptance and transfer, which is signed by employees of the Seller and the Buyer that have the authority and appropriate level of qualification for the detection of possible defects in the goods. The Buyer shall take the product and pay the price, compensate the Seller all costs associated with the conservation of the goods upon payment receivable, as well as accept the product from the Seller in the amount, quality, variety and completeness in accordance with the terms of this agreement, the act of acceptance and transfer, which is signed by employees of the Seller and the Buyer that have the authority and the appropriate level of qualification to identify possible defects in the goods.
- Price and value of the goods. The item price is discussed by the Parties in the manner specified by the contract. The Buyer pays the cost of goods in the amount of - ___£ during __ business days from receipt of the goods by transferring the funds to the current account of the Seller within __ business days. The payment is considered successful when it is been added the corresponding fund of the current account of the Seller in full.
- Delivery of goods. The Seller is obliged to transfer the goods n the container and / or packaging in a way that ensures the safety of the goods under normal conditions of storage and transportation. The acceptance and transfer of goods are a part of the invoice of the delivery of goods at the time of transfer of the goods to the Buyer that shall be signed up by authorized representatives of the Parties in two original copies: one copy goes to the Buyer, another one – the Seller. The product is considered to be at the disposal of the Seller if the deadline set up by the agreement is ready for transmission to the Buyer in the right place and the Buyer is informed in writing by sending a letter, telegram, the facsimile message or orally by telephone conversations. In the case of deficiencies in the quality of the delivered goods, the Buyer has the right to present claims to the manufacturer of the goods with the condition that these deficiencies have been found within a reasonable time.
- Risks. The risk of accidental destruction or accidental damage of the good passes to the Buyer from the moment the good is transferred to him and the signed up agreement, etc.
- Liability of the Parties. The Parties are responsible for non-performance or improper performance of their obligations under this Agreement in accordance with applicable law and the terms of this Agreement. In case of the noncompliance of the conditions of the Agreement, the guilty Party shall reimburse the losses incurred by the other Party for the actions or omissions, including loss of profits in order stipulated by the law, irrespectively of the payment of a penalty.
- Force majeure. The Parties undertake to make every possible effort to resolve all differences and contradictions that arise or are related to this agreement through mutual negotiations. All disputes between the Parties shall be resolved in accordance with the UK legislation in the economic court.
- The term of the contract. This Agreement shall be entered into force upon signature by the parties. The termination of this Agreement shall not release the Parties from the full realisation of the obligations established under the contract. The Parties may not refuse to comply with the terms of this agreement and break it unilaterally, except as required by applicable law.
- Other conditions. All changes and/or additions to this Agreement shall be concluded in a written form and signed up by authorised representatives of the Parties. Changes and / or amendments shall be entered into force upon signature and become an integral and inalienable part of this Agreement. All documents related to the realisation of this Agreement (additional agreements, addendums, orders, statements, invoices, letters, messages, etc.) and its components are integral parts.
- The location and requisites of the Parties (MacIntyre 2010)
Report to Mr. Michael Hair
The flyer sent by Bella UK to promote its new product the “Miracle Oil” shampoo has the following breach of a condition. The company provides guaranteed results, which basically meant that customers should be 100% satisfied with the quality of the offered product. In particular, the breach of a condition is the footnote that the Seller accepts no responsibility for any adverse results and the product has 20% success. At the same time, the exemption clause is legal since it is a part of the flyer, which is main offer of the Seller to the Buyer. If the Byer decides to buy using that flyer, that means that the Buyer has accepted the responsibility and concluded a verbal or written agreement with the Seller to make the payment for the offered goods.
Task 3: Principles of Liability in Negligence in Business Activities
The Difference between Contract and Tort Liability
There are several differences between contract and tort liability. Firstly, non-contractual liability arises directly from the law. The law expressly provides for the obligation to compensate the harm causer in full in case of any damage. The responsibility is imperative in this case. On the contrary, contractual liability depends on the agreement of the parties concluded the contract. Contractual liability is usually governed by the civil law regulating the kind of contractual relations. However, the parties can not only include such rights and obligations in the agreement but establish their violation of sanctions.
Secondly, a failure to tort passive liability duties and violation of the absolute rights is a legal fact, which is the basis of the failure. Contractual liability arises based on the same offence. However, it is a consequence of other disturbances in rights, obligations and legal relationships, namely the relative contractual rights, obligations and legal relations within its nature and the realisation of a civil contract. That is why tort liability may arise to any person who has violated the absolute rights. At the same time, contract liability occurs only to the party involved in the contract relationships.
Thirdly, strengthening of the relations generated by the contract is one of the directions of contractual liability. Making damage is a negative phenomenon. Tort liability is aimed at narrowing the cases of harm.
Fourthly, the difference in the occurrence of legal facts of tort and contractual liability leads to different legal nature of the debtors’ obligations. The contract is the obligation of the debtor. It is an additional duty, resulting from non-performance or improper performance of the contractual obligations and the one joined to his basic not performed or properly performed duties. As for the delinquent’s non-contractual obligations, it is his new specific obligation imposed on him instead of or in addition to non-compliance with the absolute duty of the passive type in absolute breach.
Fifthly is an identic list of conditions following up the responsibility for breach of the contract and causing damage. Illegality is interpreted in the relations arising from the contract. As a part of the contract, not only the violation of the rule of law as typical for misdemeanours is unlawful but also an infringement of any valid norm of the parties’ agreement.
Sixthly, the responsibility for the actions of other persons as the rules is provided on both contracts and torts. However, if contractual liability to the creditor comes for culpable actions of a third party without the debtor’s fault, the responsibility for the tort of a third party is established in the presence of guilt in the actions of the subject of responsibility.
Finally, the principle of full compensation for damage, which reflects the equivalence of civil legal property relations caused by the use of commodity-money form, acts as in terms of contractual and tort relations. Concerning the contract, the size of the reimbursable amounts of the creditor may exceed the actual loss. Non-contractual harm shall be compensated at the rate of such damage or in a smaller size where it is permitted by the law. As for the caused damage, the excess of liability of the amount of losses is possible only when it is specified by the law (Mak 2008).
The Concept “Duty of Care” and the Neighbour Principle
The concept of “duty of care” and the neighbour principle in the Tort of Carelessness was firstly discussed in the case of Donoghue v. Stevenson. Thus, a person can seek for compensation from another person in common law where the other party has the “duty of care” in regard to another party and the violation of that duty is considered the harm directed to that person. This concept has existed before the Donoghue case. However, it was generally believed that the “duty of care” was only existed under very specific circumstances, such as where a contract existed between two parties or manufacturers made inherently dangerous products or acted fraudulently. There was no contractual relationship between the manufacturer of beverages and Donoghue or even between Donoghue and the owner of the café since he did not order or pay for the drink by himself. Although there was a contractual relationship between the owner of the café and Donoghue’s friend, the ginger beer did not make harm to his friend.
The leading judgement of the case was delivered by Lord Atkin on May 26, 1932. The most famous section was the explanation of the neighbour principle, which was derived from the Christian principle to love a neighbour. According to the Christian source, it is a must to love a neighbour, as well as not to injure him. It is required to take acceptable care to avoid acts or omissions, which a person can agreeable foresee that are likely to hurt the neighbour. The effect of this case was not only to help the UK people to fight against the suppliers of consumer goods but allow these people to bring claims of carelessness in any circumstance where the conditions are not followed up (Lowther 2009).
Vicarious liability is a special kind of commitment. It involves three parties. The first is the lender, the second – the principal order, and the third party is an extra obliged person, the so-called subsidiary. Vicarious liability can be described in the following way. Firstly, the obliged party has not complied with the requirements. Secondly, the lender makes a claim against the principal debtor. Thirdly, the subsidiary refuses to comply with or does not give any response to the appeal within a reasonable time. Fourthly, the creditor is entitled to apply to a person who bears the subsidiary liability. Finally, the subsidiary must meet the requirement to notify the principal obligated about it. The subsidiary should involve the principal debtor to the case in case he has been sued.
Vicarious liability can be disputed under two circumstances. These are the case when the person who has made the harm is not a worker but a third party not supported by the contract, or the damage has been made during the actions that are not in compliance with the terms of the agreement. Additionally, the worker may be a subject of vicarious liability in case of making any harm to an independent contractor. Taking into account the described above circumstances, Norfolk farms cannot be vicariously liable in this case since Matthew has been hired without the company awareness of this, as well as no legally signed up the contract. At the same time, Matthew can try to sue Alan as he made a verbal agreement or a simple contract with him to help him on Wednesdays.
Task 4: Practical Use of the Principles of Liability in Negligence in Business Activities
Case Study: Brad v. Charles
Carelessness is any failure to perform the official’s duties caused by an unfair or negligent attitude to the service, if it has resulted in a substantial violation of the rights and legitimate interests of citizens or organisations, as well as legally protected interests of society or the state.
As for Brad’s case when he was provided incorrect financial information about Albert’s liability to pay his debts, an accountant Charles D Lois is liable for the damaged he has caused to Brad as a result of his inappropriate actions. It is supported by the following fact:
“An accountant may be liable for carelessness, not only in contract but in tort, if a person to whom he or she owed a duty of care has suffered loss as a result of the accountant’s carelessness” (Acca 2009, p. 2).
Case Study: Graham v. The Client
As for the Graham’s case, Macho Men plc is liable for his actions in case of any damage to the customer since Graham is tied with the signed up agreement with the management of the night club. However, if the company adds a special condition prohibiting manhandling of its customers, Graham would the one responsible for the caused damage, while the company was protected by the terms and conditions of the contract concluded by the two involved parties.
Case Study: Carla v. George
In case of the damage caused by Carla to a car driven by George, it is believed that it is Carla who should be responsible for the issue happened due to several reasons. Firstly, Carla used the corporate vehicle for her own purposes in the first place. In particular, she wanted to drive her friend Lucy to the railway station. Although Carla decided to do some work during her official day off, still it cannot be regarded an official working day. This fact makes Links Ltd not vicariously liable since the damage was not been done during the working hours and under the terms of the signed up contract between Carla and the company.
The essay has discussed the essential elements of a valid contract in a business context and the realisation of the elements of a contract in business situations, as well as the statutes of obligation in carelessness in commercial activities. The realisation of the elements has been studied in practice when discussing different case studies provided during the leaning process itself.