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Aspects of Contract and Negligence for Business

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Free «Aspects of Contract and Negligence for Business» Essay Sample

Task 1 (LO1)

Ben must first understand the significant elements required for the formation of an offer and acceptance contract, as this would be instrumental in guiding him to understand whether he can bring a successful case against ARBOS Stores.

The Importance of the Essential Elements Required for the Formation of a Valid Contract

Firstly, Ben must understand that an offer is one of the essential elements required for the formation of a valid contract in this situation.  Pannebakker (2013) affirms that this is the expression of the willingness to contract on certain terms that would become a binding once accepted by the offeree. Accordingly, an offer may take different forms including newspaper advertisement, the conduct of a person, or a letter, as long as it explains what the offeror expects. This element is significant for explaining the objectivity and validity of the overall offer.  Pathak (2013) points out that the case Smith v. Hughes would be a guiding principle for Ben in terms of determining any chances for a successful case. In the case, the court ruled that an individual party could not determine the validity of an offer subjectively, but should be guided by the objective view of a reasonable person. Therefore, Ben could be limited in bringing about a successful case, as he tended to view the offer with subjective intentions as opposed to the determination in this case.

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Secondly, the element of acceptance must be available for a valid contract to be formed. The contract would only become valid in cases where the offeree accepts the terms stated in it. Acceptance could be made orally or in writing. In this case, Ben made it orally when he talked to the sales assistant at the counter.  Clarkson, et al. (2008) reiterates that acceptance is crucial in showing the willingness of the offeree to be part of the contract. In this case, Ben accepted the price, which had been placed on the TV. However, it would not be helpful in terms of bringing about a successful case.

The third vital element for the formation of a valid contract is the intention to create legal relations. This is the court’s presumption that the parties involved in the contract intended to make it enforceable. Terms such as ‘subject to contract’ might be used to indicate the intention of the parties to create legal relations. For a successful case, Ben would have to prove that ARBOS Stores intended to create legal relations with its customers placing a special offer on the TV. MacMillan and Stone (2012) assert that the objectivity test held in the case Carlill v. Carbolic Smoke Ball Company could limit Ben’s ability to argue that ARBOS Stores intended to create legal relations with him because he tended to be subjective in his analysis of the special offer.

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The last significant element necessary for the creation of a valid contract is consideration. This is the benefit that is given to the other party in terms of monetary value, goods, and services. Pathak (2013) opines that it is important because it shows the offeree’s commitment to the contract. Again, the consideration does not need to be adequate as long as it has already been made by the seller or the provider of the service. In this case, Ben could argue that he was ready to provide the consideration of 100 pounds, as stated by ARBOS Stores in its special offer. He could be successful in bringing about a case, as long as he can prove that it is not past consideration.

The Impact of Different Types of a Contract

Ben must be able to distinguish between offer and acceptance contracts and an invitation to treat contracts. An offer and acceptance contract is always a form of bilateral contract where there is an exchange of promises between two significant parties, the offeror and the offeree. Clarkson, et al. (2008) indicates that the impact of an offer and acceptance contract is to create legal relations between the parties by ensuring that every party fulfils its part of the promise. For instance, the offeror is always expected to offer a particular item to the offeree. The offeree is then expected to accept it fully for the contract to be valid. Ben should be guided by the case Australian Woollen Mills Pty Ltd v. The Commonwealth to understand the nature of the special offer made by ARBOS Stores (Pathak 2013). This is not necessarily an offer and acceptance contract, and it could limit his ability to bring about a successful case.

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The second significant type of contract that Ben must understand is the invitation to treat. The aim of the invitation to treat is to show the willingness of a person to negotiate a contract. It is pre-offer communication. Pannebakker (2013) reiterates that the case Harvey v. Facey would play an instrumental role in guiding Ben to understand the strength of any case he intends to bring against ARBOS. In tandem with this case, Ben faces a challenge as the company could argue that it was only inviting its customers to negotiate the price of the TV. In fact, goods on display have been categorised as the invitation to treat, as the seller could decide to change the price depending on the existing economic conditions. The presence of this contract would affect Ben’s ability to bring a successful case against ARBOS Stores.

Terms of the Contract with Reference to their Meaning and Effect

Several significant terms could be helpful to Ben in terms of bringing a successful case against ARBOS Stores. The first significant term is that acceptance must be communicated. This means that the offeree must communicate his intentions to be part of the contract to the offeror (Clarkson, et al. 2008). Ben communicated within the required time, and might have a valid case based on his adherence to this principle.

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The second vital term is the exception to the unilateral contract. This term relates to a scenario where the business makes an offer to all its customers like in this case. In line with Pannebakker’s (2013) opinion, the effect is that it would limit Ben’s ability to sustain a successful case against ARBO Stores. He cannot argue that he was the sole offeree who accepted the offer that had been given on TVs by the company.

Overall, it would be tough for Ben to bring a successful case against ARBOS Stores because of the nature of the contract in question. The ‘offer’ is more of an invitation to treat than an offer and acceptance contract because the company is only willing to negotiate terms with its customers before selling the TV.

Task 2 (LO2)

Application of Elements of the Contract in a Given Business Scenario

Carol should understand that she engaged in a standard form contract with ARBOS Stores. This would form the foundation of a successful case against the company. One of the most significant elements of the standard form contract in this business situation is that only one party is responsible for setting the terms and conditions of the contract (Ben‐Shahar 2009). In this scenario, all the terms and conditions of the contract were made by ARBOS Stores. With this in mind, Carol had no chance to negotiate these terms, as she was the inferior party to the contract.

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Another significant element that Carol needs to understand relates to the reading of the terms stated in the contract form. She signed the contract without reading all the terms stated in it. The law emphasises that she would be bound by the terms of the contract whether she read it or not.  Porto and Gomes (2010) affirm that this element might hinder her efforts to force the company to repair the laptop or get her a new one. Individuals are required to study the terms of the contract carefully and understand the responsibilities of the contract they were given. Otherwise, they would be bound by all the terms stated in the contract.

Application of the Law on Terms of the Contract

One of the most significant things that Carol should understand is that standard form contracts always have two significant terms. The first terms are implied terms. These are the terms that are not negotiated by either of the parties to the contract, but find their way into the standard form. The contract would not have made a commercial sense without implied terms. For instance, the terms relating to the company’s refusal to take liabilities for repairs are indications of the express terms. Carol did not read these terms before signing the contract, and this puts her in a difficult position in terms of suing the company for repairs and replacement of the laptop. However, these terms have to be included in good faith as seen in the case Merton LBC v. Stanley Hugh Leach Ltd (Patterson, 2010). This would give Carol an advantage as the terms in the standard form contract appeared too strict regarding the customers.

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Another vital term that Carol needs to understand is the express terms. These are the terms negotiated between the parties in the contract at the time the contract is made. It is stated that Carol discussed some terms of the contract with the seller before deciding to buy the laptop. This made her aware of some relevant details relating to the contract.

Evaluation of the Effect of Different Terms of the Contract

It is clear that both of these terms affect Carol’s ability to bring a successful case to force the company to repair the laptop or give her a new one. This is because she signed the standard form hence making it enforceable. It is extremely difficult to argue that she did not read the contract because these terms became immediately binding once she signed it.

However, there is still hope because of the exclusion clause. The aim of the exclusion clause is to protect consumers against unfair terms of businesses. Carol would specifically benefit from the Unfair Consumer Contract Terms of 1999, which protects the basic consumer rights in the contract (Porto and Gomes 2010). For instance, it was unfair when the company refused to repair the laptop, as she was going to pay for it for12 months.  Patterson’s (2010) view is that the contract was not in good faith, and the case Director General of Fair Trading v. First National Bank would be crucial in helping her prove that ARBOS did not act in good faith in the standard form contract. There was no sense of benefit on the part of consumers in this contract hence Carol could come up with a successful case against the company.

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Task 3 (LO3)

Liability in Tort vs. Contractual Liability

The starting point for David to understand the success of his case against the driver or Express Lines Company would be the analysis of the differences between the liability in tort and contractual liability.  According to Best and Barnes (2007), it is worth noting that a tort is not based on any form of consent between the parties. The liability in tort arises in instances where another party intrudes into the safety, privacy, or profit of another person. This is a significant case of a tort where both the driver and the bus company owed David a duty of care. He needed to disagree to any terms of the contract and both the driver and the company needed to protect his safety as he travelled. For instance, David could base his case on the decision in the case of Donoghue vs. Stevenson where the House of Lords ruled that an individual should sue any party that causes him injury even if there is no contractual relationship (Kidner 2012). He needs to rely on this case to establish the fact that the company owed him a duty of care, which was breached leading to his broken leg. On the other hand, contractual liability exists where both parties have voluntarily reached an agreement knowingly. One could sue in instances where the terms of the contract have been breached. David must establish that there is no contractual liability in this case. He would be able to bring a successful case against the driver and the company based on the tort liability, as the company owes him a duty of care as a passenger.

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The Nature of Liability in Negligence

The liability of negligence exists where harm is caused to a party because of the other person’s carelessness. David would only bring a successful case against the driver and Express Lines Company in cases where he understands the nature of the liability of negligence. The first significant element that David must establish is that both the driver and Express Limited Company owed him a duty of care. In this case, the duty of care was to ensure that he reached his destination safely. The company and the driver needed to do everything to protect him in the course of the journey through careful driving and adherence to safety standards. Accordingly, David would have a strong case against the driver and the company if he relied on the case Caparo v. Dickman to establish that the harm caused to him was reasonably foreseeable especially when the driver went against the policy of taking a break after the 5 hour drive (Owen, 2007). More so, the case would enable him to establish that there was a relationship of proximity between him, the driver and the bus company, and that it was reasonable on his part to impose the liability.

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Secondly, David would be in a better position to sue for negligence in cases where he is able to prove that his duty of care was breached by the company and the driver because of their carelessness. Once he establishes that both the driver and the company owed him a duty of care, he should confirm that the defendants knowingly exposed him to risk. The driver deliberately ignored the policy to take a break every five hours hence exposing David and other passengers to risk of injury. According to Owen (2007), it is clear that the driver’s behaviour exposed him to risk, and he suffered because of his broken legs. Therefore, he would be able to establish the liability for negligence on the part of the driver because of his failure to follow the common rules of taking a break along the way.

Lastly, he must establish that he suffered harm because of the driver’s negligence for him to succeed in the case. He must prove that the conduct of the driver caused him pecuniary loss. With his broken leg, it would be easier to sue for negligence and recover nominal damages or any other forms of damage depending on the determination of the court. Therefore, his injury gives him an edge in the case, and he would have a stronger case against both the driver and the company.


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How a Business Can Be Vicariously Liable

Vicarious liability concerns an employer being held liable for the torts of his employees. The business can only be vicariously liable in cases where its employee acts within the course of his employment. This means that the employee has to be acting in line with the rules and regulations of the business when the injury occurs. In this case, the business might not be vicariously liable for the acts of its driver because it had a clear policy that drivers must take a break every five hours of driving. However, the driver went against this policy and continued driving without rest.  Giliker (2010) insists that David must enforce the case against the driver, as he did not follow the rules of the company. The company would not be vicariously responsible, as everything was done beyond its policies and regulations on driving. Overall, David would have a more successful case against the driver compared with the one to the company, as the driver tended to act according to his own principles against the company’s policy.

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