Contract can be stated as the agreement among two parties forming an enforceable obligation to create a valid contract. Moreover, it is essential for parties to form a specific contract and also they cannot breach the contract without prior information. However, in order to fulfill the terms and conditions of the agreement it is essential for both the parties to gain consent of the members before entering into the contract (Falk, Huffman and Macleod, 2015). The present study analyzes varied essential elements of contract in order to form a contract. Further, different contractual terms such as express, implied and innominate terms have been assessed with reference to their meaning and effect. Different case scenario of Mary and Film Flops have been evaluated. At the end, different concepts have been involved with the field of contract and implement it in order to analyze the proper case laws and statutory provisions.
There are different elements that need to be involved in order to form an induction document so that new employees joining the organization can gain legal knowledge. It assists them to raise their legal knowledge and use it whenever necessary. Following are the points that will be involved in order to conduct the program.
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1.1 Essential elements required for the formulation of a valid contract
As per the law, contract can be defined as the form of agreement between two or more parties creating an enforceable obligation to do or to refrain from doing any specific thing. However, the main purpose of contract is to establish the agreement made by the parties and also fix their rights and duties in relation to the particular contract (Fried, 2015). The contract made should be valid and also parties should have an intention to enter into legal relationship. Following are the elements that are required in order to formulate a valid contract. These are as follows-
Offer and acceptance- It is the first and foremost element of the contract that states that it is essential for the party to provide offer to another party in order to form a legal relationship. However, offer is considered as the first stage that starts the other element of the contract. It can be assessed that the party cannot formulate legal relationship by providing offer till the offer is not accepted by another individual. Hence, the offer made by the party will be considered as valid if the party accepts it in the similar way (Gilbert and Vargo, 2014). Thus, the acceptance by the party states that they are satisfied from the terms and conditions involved within contract. As per the case of Harvey Vs Facey . It can be evaluated that as per UKPC I the Facey has not answered the questions that is being asked by Harvey. Hence, it states that there was not legal relationship formed among the parties. Therefore, it can be indicated that the contract will be valid if the party has accepted the offer in the similar way (Gray, 2010).
Consideration- Here, it is another crucial element of contract. It states that consideration is something given in return by both the parties at the time of performing the contract. However, consideration can be in the form of both monetary and non monetary as decided by the parties. Also, it is crucial for parties to make prior decision in regard of consideration before entering into the contract (Groetelaers and Ploeger, 2007). However, if the party fails to provide consideration as per the promise than the contract is not enforceable by law. Tweddle Vs Atkinson .
Intention to create legal relationship- It can be assessed that the present element states that the parties entering into contract are required to create legal relationship. However, the offer is considered as valid if individuals shows their positive intention in regard to form a contractual relationship among each other (Jones, 2002). While, if either of the party decides to not formulate a legal relationship than the contract is stated as void. The relevant case is Kleinwort Benson Ltd. Vs Malaysia Corporation Bhd .
Capacity- Further, it is another important element of contract. It can be stated that the parties who are entering into the contract should be competent so that contract can be valid and enforceable. On the other hand, it can be indicated that minor, person of unsound mind and drunk person will not be considered as competent parties to enter into the contract (Krishnan, 2011).
Free consent- Here, the contract that is formulated through forceful and ineffective act and also it is totally discarded within the eyes of law is not considered as valid and enforceable contract. Hence, at the time of forming the contract proper freedom should be provided to the parties to decide whether they are interested to enter into certain legal or contractual relationship or they are not interested within it. For instance, consent gathered through undue influence, misrepresentation and coercion type of acts will not be considered as valid contract (Middlemiss, 2011).
Possibility of performance- Here, the parties who are forming the contract should ensure regarding the possibility of performance. As per the element it can be stated that the parties of the contract should be able to perform the act that is being specified by them within the contract (Milner, 2011). For instance, due to lack of possibility of performance of the contract it might affect the validity of the agreement. Hence, such type of contract are not enforceable by law.
1.2 Different types of contract
There are different types of contracts formed among parties with unique characteristics are as follows-
Distance contract- Here, it can be stated that within such type of contract relationship has been developed among parties who resides at distant places. Hence, within such type of contract parties do not meet with each other or no face to face meeting is conducted. However, in order to communicate with each other regarding the terms and conditions parties take help from e-mail, post and telephone. For instance, such contract is considered as valid if all the terms and conditions related to postal are applied to the same (Chambel and Fortuna, 2015). Further, the only problem faced by the parties in regard of getting certain proof of forming the valid contract.
Face to face contract- Further, in such type of contract both the parties meet each other and make decision regarding the terms and conditions of the contract. Within face to face contract both the members of party mutually decide to act or perform in order to meet the needs and develop legal relationship. Such contracts are time based and thus parties are forced to make quick decisions that whether they want to establish legal relationship with the parties or not (Endres and Friehe, 2013).
Oral contract- Here, the relationship within different individuals are formed through verbal way. However, such form of contract possess huge uncertainties or complexities. For instance, it is due to the fact that within oral contract party do not have any proof of their legal relationship. Hence, with the aim to protect the parties of contract, it is essential for them to make a written and valid contract (Godden and et.al., 2013).
Written contract- Further, such type of contract is very popular and used by parties to enter into the contract. Here, the contractual parties write all the terms and conditions of contract in writing and thus contains a valid evidence for further use. Further, parties are required to prepare a deed in order to describe all the contractual terms present within contract. For instance, if any of the parties fails to fulfill the terms and conditions of the contract at that time the deed can be used by the respective party who is affected because of non fulfillment of performance by other individual (Hunt, Kessler and Mawer, 2012).
Bilateral and Unilateral contract- The bilateral contract can be stated as the exchange of mutual, reciprocal promises among the parties in order to carry out the performance of an act. On the other hand, unilateral contract is the promise which is made by one party i.e. the offeror to carry out the certain thing (Johnson, 2013).
Void and Voidable contract- Here, the void contract can be stated that it imposes no lawful rights or obligations upon the parties and also it is not enforceable by law. While, the voidable contract is a legally enforceable contract because such contract can be treated as having never been binding upon the party who was suffering from certain legal disability (Partington, 2013).
Furthermore, it can be evaluated that all such type of contracts are important in order to carry out the agreement. However, if helps in forming a valid contract so that it does not bound on parties to execute the contract.
1.3 Different forms of contractual terms
According to the English law, it can be stated that the contractual terms are certain guidelines that all the members of the party are required to be fulfilled. However, it is due to the fact that it is being required by the party that they need to follow all the terms of the contract (Posner, 2013). In regard to the given fact, following are the different forms of contractual terms which are as follows-
Express terms- Here, the parties who have formed a legal relationship by entering into the contract are required to communicate different terms either oral or written. However, such terms possess several other terms that are as follows-
- Conditions- Conditions are being considered as one of the best terms of contract. It is because stated terms are directly connected with the terms of agreement (Stychin, 2012). Also, it is essential for the members of the party to fulfill the conditions of contract in order to attain desired goals. It is because, if such conditions are not fulfilled then the party who is in default position is required to pay the damages which are being incurred by another party.
- Warranties- Further, it is being considered as ancillary or subsidiaries terms that contains the obligation of the members of the party should fulfill. For instance, if the party is not able to fulfill the duties of the contract than they are required to pay the damages to other person who has incurred losses (Zoll, 2012).
- Innominate terms- Here, the terms cannot be considered under warranty and condition. However, in order to provide damages to the affected party it is essential for them to consider that the party is innocent and also being deprived from all the profits of the contract (Levinson, 2005).
Implied terms- Moreover, the parties who have entered into the legal relationship is not required to make decision regarding the given terms. Hence, it can be stated that the contract is made under the eyes of law. However, it helps the parties to protect their rights who are entered into the contract to form a legal relationship (Occupiers’ Liability Act 1957. 2014).
Exclusion clause- It can be stated as the clause which is made with an aim to protect the rights of individuals who has done something wrong within the eyes of law. Therefore, it can be assessed that exclusion clause is the part of unfair terms. However, it is applied for the aim to protect the individuals of the party who is in default from the payment of damages (Elements of negligence. 2015).
2.1 Essential elements of contract as per the scenario
As per the stated case, it can be evaluated that Mary has purchased a television set from a departmental store named “Sales Are Us”. However, at the time of purchasing the television set from the shop Mary has undergone a contract and signed it which was given by the sales assistant of the organization. Here, Mary does not review or read the contractual terms and conditions of the agreement and signed it. However, on the same day of purchasing the television it got exploded and causes serious burns to her arms. Thus, Mary got injured due to this accident.
Applying of essential elements
It involves different elements of contract which are applied to the stated case. Sales Are Us has given offer to Mary and she has accepted the offer by signing the standard form of contract that was presented by the sales assistant within the store. However, in regard to this, consideration in the form of money has been given to the business and television has been given to Mary. Hence, it can be concluded that there is a legal and contractual relationship formed among the parties (Free consent element of contract. 2015).
Validity of the agreement
For instance, it can be assessed that the presence of different elements of contract is there in the stated case. However, it shows that the contractual relationship that is being established among Mary and Sales Are Us will be considered as valid because both the parties have entered into a legal relationship (Falk, Huffman and Macleod, 2015).
2.2 Applying different law on terms
There are numerous laws on terms that are being applied within the stated case. However, through analyzing the given case, it can be evaluated that the contract which is being formulated by the Sales Are Us has stated clear information regarding the different types of clauses i.e. Clause 9 and Clause 11. Both these clauses define different conditions. For instance, Clause 9 states that the Sales For Us organization will not have any liability for the replacement or repair of faulty products (Fried, 2015). However, in all the situations the client is required to bear the cost of either replacing or repairing any faulty product. While, the Clause 11 depicts that organization accepts no liability for any death or personal injury caused by the sale of faulty products.
As per the stated case, provisions of Unfair Contract Terms Act 1977 have been implemented so that organization is required to make lawful contract with their clients. Term of exclusion clause will be applied as a valid provision if the present circumstance is valid in the eyes of legislatory aspect. While, according to the Sales of Goods Act the clause number 11 will not be applied within the case. It is because the stated act articulates that the organization who sales the goods to clients should take the responsibility to provide the best quality products and services to individual in order to gain satisfaction (Gilbert and Vargo, 2014). In the present case, the terms of exclusion clause will not be executed as Sales Are Us is liable to provide the damages to its customer for losses.
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2.3 Evaluating the remedies that are available to Mary
In accordance to the above case, it has been assessed that Mary got injuries on her arms when she was turning on the newly purchased television set. At that time television exploded and Mary got serious injuries on her arm. In regard to this accident, Mary had not went to work for three weeks. Thus, she suffers losses in her salary for such weeks. Thus, it can be concluded that due to her injury she was not able to go to work and suffered financial losses (Gray, 2010).
Furthermore, after recovering from injury, Mary had gone to store and claim regarding the losses that has been incurred by her. Mary demanded two compensation from Sales Are Us i.e. replacement of the television set and second she demanded financial compensation in regard of her injuries that she incurred on her arms due to explosion and losses of salary for the three week time period. Further, through evaluating the case, it can be stated that there are numerous remedies available to Mary. For instance, the applicability of exclusion clause in the current case will not be seem so valid (Jones, 2002). However, it can be assessed that Mary has full right to claim financial losses that she incurred from Sales Are Us. Also, she can demand the replacement of faulty television set because as per Section 3 it states that the product that individual have purchased should not break in one day.
3.1 Contrasting liability in tort with contractual liability
It can be stated that the liability in tort and contractual liability are different from each other. It is as follows-
Liability in tort
Formation of stated liability
It can be assessed that the given liability is applied at the time when the particular party of the contract fails in fulfilling the stated legal obligations of agreement. Thus, due to this it affects the innocent party and gain damages (Groetelaers and Ploeger, 2007).
While, the disappointing actions occurred by the parties assists in developing contractual liability.
Relationship among parties
Here, the court of law develops the relationship among the parties.
While, here the parties themselves make the decisions in regard to form a legal agreement (Milner, 2011).
Ground linked to losses
Within liability to tort, parties are not intended to prepare any type of contract deed. Hence, here the parties who perform unlawful means are required to pay the losses to the injured party (Chambel and Fortuna, 2015).
On the other hand, within contractual liability the deed is used as the basis in order to provide damages to the particular party.
3.2 The nature of liability in negligence
Here, negligence can be stated as the act in which the individual got injured because of the negligent act occurred by party. However, in regard to this there are varied principles assessed that claimant party could use in order to claim the losses which has been incurred by them (Godden and et.al., 2013). It is as follows-
- Duty of care- Here, such principle states that the individual who reside within the duty of care position is required to make effort in regard to protect the rights of individual from getting affected. As per the case of Donoghue Vs Stevenson. Stevenson possesses the duty of care to protect the clients by providing them high quality of drink (Hunt, Kessler and Mawer, 2012).
- Breach of duty- Further, this principle indicates that there should be breach of duty that needs to be performed by the defendant party. Thus, in the present case only the claimant party is liable to claim for the incurred losses from the other party. However, within Donoghue Vs Stevenson case, a decomposed snail has been found within the drink. Thus, it states that Stevenson has breached the duty of care in regard to deliver the best quality of products and services to customers (Johnson, 2013).
- Causation- It is the last principle, that shows that the damages must be caused to claimant due to certain negligible action of defendant. In the case of Donoghue Vs Stevenson, damages has been incurred to Donoghue because of breach of duty by Stevenson. Hence, the affected party possesses the right to claim the damages from the party (Partington, 2013).
3.3 How a business can be consider as vicariously liable
Vicarious liability can be considered as the form which is imposed upon the employer due to certain ineffective activities occurred by workers at the workplace. There are certain conditions through which the business can be held vicariously liable. It is as follows-
- It is essential to form a employer-employee relationship (Posner, 2013).
- Further, the individual who has done something wrong should be working as full-time employee within firm.
- The act of negligence should be executed by employees while they are in the employment (Stychin, 2012).
3.4 Applying the elements of tort of negligence as per the scenario
CASE EXPLANATION OF FILM FLOPS
In the present case, it can be stated that Film Flops is regarded as vicariously liable for the activities occurred by their workers. For instance, it is the duty of the employer to male sure that the workers should be competent and not consume any type of intoxicated element while they are at work. It should be specifically mentioned in the employment contract. Thus, it was found that an employee of Film Flops was intoxicated at work and accidentally poured coffee on the hand of customer that causes serious injury. Thus, Film Flops is being held liable for the act done by its worker.
Following are the elements that are being applied to the Paul case-
- Duty of care- Here, the manager being the employer of the Film Flops resides within the duty of care position. Hence, it is their duty to guide their employees to not get intoxicated while at work and protect the customers from any damages (Zoll, 2012).
- Breach of duty- However, the Film Flops worker is found guilty because of consuming intoxicated element while at duty and affected the customer. Hence, the employee has breached the obligations.
- Causation- Further, the negligence act performed by Film Flops caused damages to Paul and injured his arm (Levinson, 2005).
For instance, all the stated principles have been implemented within the Paul case. Thus, Paul is liable to claim the losses that has been incurred by him from Film Flops.
3.5 Applying the law on vicarious liability
Following are the different principles that are being assessed which defendant can use in regard to save themselves from payment of damages. It is as follows-
- Volenti non fit injuria- Within such type of element, it is the condition when an individual intentionally enter into such situations that causes losses to them.
- Contributory negligence- Here, both the parties i.e. claimant and defendant are equally held liable for the negligence act (Endres and Friehe, 2013).
- Ex turpi causa- This particular principle states that the defendant party will not be held liable in the position of negligent if it has been proved that the act occurred by them is not defective.
Thus, in the given case, provision of Ex turpi causa will be implemented. However, it is because at the time of conducting negligent action worker is being found under the influence of intoxicated substance. Hence, employer of Filmy Flops is not able to overcome the actions of his worker (Krishnan, 2011).
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From the above study, it has been concluded that aspects of contract and negligence in business play a crucial role in the legal terms as it helps innocent party to claim damages for their losses as well as injuries. Now-a-days rate of crime has been increasing to a high extent in the business and professional organization. Due to this, it is required to follow the rules and legislation of government in order to perform the business activities in a legal manner and protecting the rights of individuals such as customers and employees. In the above study, Sales Are Us is liable to pay damages to Mary for their losses as per the provision of Unfair Contract Terms Act 1977.
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