ASPECTS OF CONTRACT AND NEGLIGENCE FOR BUSINESS

 

[Name]

[Date]

  

Task 1: Elements of a Contract

Qa

There are four important elements for a valid contract: offer, acceptance, consideration and intention. An offer is readiness to do something. One party in a contract must make an offer that should be accepted by the other party. There can be no contract unless the offer is accepted by the person to whom the offer is offered. Consideration means that there is a benefit in terms of economics value. The intention element in a contract is the acknowledgement by both parties that the agreement they are entering into is legally binding (Macmillan and Stone,2012). The four elements are important in that they determine the enforceability of a contract. They are the elements that a court will look for in order to determine that there is a valid contract that each of the party has an obligation to perform.

Qb

A contract in the UK can either be written, verbal, on-line, or by deed.  Just like the word suggest a written contract is created through formal written agreement signed by both parties. Verbal contract are created through word of mouth. As the usage of technology becomes common in business, like in e-commerce, the court also accepts on-line contracts such as those created through exchange of emails, website and mobile phones communication (Cartwright, 2014). Contracts by deed on the other hand are agreements detailing the purchase of a property, commonly through instalments.

Each of these types of contracts has significant impact. Written contract are the most secure and easier to enforce. English law demand that such contracts as concerning land should be written. Verbal contract are difficult to enforce since the party have to rely on other factors like conduct to prove their existence. On-line contracts are equally binding the same way as those formed in off line world, the rules are the same. Contract by deed are by other term instalment contract. The buyer agrees to pay the seller in instalment terms for the purchase of the property.

Qc

Terms and conditions are the provisions that together make up a contract. When parties are entering into a contract, they decide which term and condition are going to guide a contract. Terms and condition can either be expressly stated or implied. Express terms are determined by the parties themselves while implied terms are drawn from the nature of the contract. Some terms and conditions may have strict requirements in terms of performance of the contract while others may carry less legal weight (Cartwright, 2014). Failure to live up to the terms and conditions may be charged as breach and a damage sought or to the cancellation of the contract.

Task 2: Application

Qa

In the UK employers have a duty to ensure health and safety of their employees (R v Chargot Limited).  This duty includes providing employees with safety equipment and training employees in all health and safety aspect. Even if the duty is not expressly stated in the employment contract, it is always there.  The healthy and safety condition in the employment contract is implied. Failure to train the workers on the site in operating the heavy equipment and failure to recognise the dangers exposed by the lack of training is a breach of the duty of care, and therefore a breach of the employment contract. The contractor has not performed his side of the employment contract to guarantee health and safety.

Qb

When the grocery shop offers to sell the products and the customers go ahead to buy, a contract is automatically formed. The four elements of a contract –offer, acceptance, intention, and consideration- are present. The most important element hers is the intention to create a legal obligation. One of the legal obligations in consumer contracts is that when sellers put their goods for sale they assure their customers that the products are fit for consumption or use. Expired products are not fit for consumption. The fit for consumption obligation in grocery shop is implied. The customers trust that the good sold, even if at a discount are fit for consumption.  In case the customers do not know about the expiry, there is a breach of the implied term of health and safety of the products sold. If the grocery shop has disclosed full information about the expiry, including expiry date, the customers may be deemed to have consented to the terms of an expired product.

Task 3: Time of the essence

A time of the essence clause in a contract is applied to ensure that the performance of a contract is carried within a particular date. What time is of the essence clause means is that performing the contract within the specified time is important and mandatory. Failure to observe the specified time is considered as a material breach of the contract. In that regard, the affected party may seek damages, injunction or cancel the contract (Lim, 2012).  In this case, the clause requires that the contractor pays $175 “for each day the work is not substantially completed after 1st November 2015. This is a common clause in construction contracts as it is expected, like the scenario shows, delayed completion of the project may end up affecting completion of other projects and inconveniencing third parties. Apart from construction contracts, a time is of the essence clause is also common in contracts involving supply of perishable food, music performance real estate contracts or any other contract that is dependent on time.

Normally, when time of the essence clause is not inserted in a contract, the court assumes that time was not important and performing the contract within the specified time is not mandatory (Lim, 2012). In such a case, the emphasis of the court is for the contracting party to perform the contract within a reasonable time. However, when time of the essence clause is inserted in a contract, the performing party is obligated to complete the project within the specified time, and a liability for not completing is thus imposed. Nonetheless, the court may be considerate if the performing party shows good faith in performing the contract or if there was a restraining factor beyond its control (Lim, 2012).   In this case, the contractor can show good faith by the factor that it has completed 85% of the work. However, that may be difficult because there is clearly a loss in delay- RTA has not been able to complete the Metro work at Jebel Ali terminal not to forget the inconvenience that the people of Dubai will continue to undergo during the delay.

Task 4: Innominate Term

Case 1

 The ABC will have the right to treat the contract as at an end. Like the court established in Hong Kong Fir shipping v Kawasaki Kisen Kaisha where the breach of a contract substantially deprives the innocent party the whole benefit of the contract, the party has the right to terminate the contract. In case one, the cars supplied were illegal in the UK and no amount of modification could make them legal. In this case, as the court ruled, the cars can be said to have substantially deprived ABC the whole benefit of the contract. They cannot be used in the UK and therefore the court will treat the contract as at an end. The innominate term in that case will be regarded as a condition.

Case 2

In this case, basing on the Hong Kong Fir shipping v Kawasaki Kisen Kaisha the court may rule that the needed adjustment cannot substantially deprive ABC the whole of the benefits to use the cars. ABC therefore cannot terminate the contract based on this case. More importantly, the court may rule that the 5 minutes needed are within the definition of “immediately”. In this case, and therefore no contract has been breached. This means that London suppliers have performed to the conditions and terms of the contract.

Case 3

In this case, the court like in Hong Kong Fir shipping v Kawasaki Kisen Kaisha may rule that the London Suppliers breached a warranty. This is not a reason to end a contract but ABC may seek damages. In such a situation, the supplier has not substantially deprived ABC the whole benefit. Taking 3 months to adjust the cars to conform to the EU environmental laws does not substantially affect the contract and therefore ABC cannot end the contract but has the right to seek damages.

Task 5: Legal Liability

Liability as a consequence of negligence and the liability incurred as a result of entering into a contract are both form of legal liability. Negligence liability is a result of breach of a tort while contractual liability is a result of breach of a contract. While negligence liability arises as a result of defendant failure to observe a duty of care imposed by the law, contractual liability arises out of a party to a contract failure to perform. This means that negligence liability is imposed by the law while contractual liability is voluntary. The law imposing a negligent liability can either be a statutory duty or a common law. The liability for contracts is derived from individuals or business agreements.

 Each of a person or a business has a duty of care not to cause injury to others. Failure to observe the duty of care result into a negligent claim of which damages may be awarded. In contrast, individuals or businesses choose to enter into contracts and as a result voluntarily accept duties to perform a contract. While the remedy for a negligent liability is an award of damages, the remedy for a breach of contract, on top of award of damages, may involve recession or restitution (Kelly et al 2014).

Task 6: Donoghue v Stevenson 1932

Donoghue v Stevenson is an important case in the tort of negligence. It is the founding case to show that an individual or a business owe another person the duty of care. In this case, Donoghue was given a ginger beer by a friend bought from Stevenson, the manufacturer. After Donoghue had way far consumed the beer she saw a dead snail coming from the bottle. As a result, Donoghue was taken ill. The sight of a dead snail was awful. Since she had not bought the beer, she could not accuse the manufacturer of breaching the contract. The case had to be charged a negligent on the side of the manufacturer leading to a breach of duty of care.

The importance of this case is that it was the first to establish the duty of care. As manufacturer, Stevenson was held responsible for the breach of the duty of care. This case established that, even without a contract a person can be held responsible for acts or omission that were foreseeable would cause an injury to another person. In this case therefore, the court held that it is the duty of the manufacturer to ensure that snails do not get into his products. Each manufacturer owes its consumers a duty of care. The ruling was arrived at even when there was no any other such a case ruled in favour of the applicant before.

It is in this case that the House of Lords established the neighbour principle. This is regarded as the most important principle to be drawn out of this case. The principle has become the foundation of the law of negligence. Lord Atkin explained the principle as: “you must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour”. The Lord went ahead to explain the neighbour as a person who is close to someone and who is directly affected by another person acts or omissions. This is also referred to as the “neighbour test”. It is therefore now firmly established in the law of negligence that a person’s acts or omissions that harms a person who is close or neighbour becomes a negligent act or omission. Such a person is liable for a negligent claim. This case also means that in modern businesses, manufacturers have a duty of care to their consumers to provide products that are safe for consumption, even without establishing a contract on the same.

Task 7: Vicarious Liability

Vicarious liability is a doctrine that allows employers to be held liable for the actions or omissions of their employees. What this means that the injured party may be able to seek compensation from the employer rather than from the employer. The reasoning behind this argument, as the court explained is that “a servant is a person who is subject to the command of his master as to the manner in which he shall do his work” (Yewens v Noakes). In addition, the employer is seen as a person who is capable to compensate the injury caused. The employee may not be in a position to pay for the damages.

For the employer to be held vicariously liable, the employee must have been acting in the course of his employment. There has to be a close relationship between the action and the responsibility of the employee (Kelly et al 2014). For that reason, for the court to allow complainant to sue a company for the action of its employer, it has to perform to test to ensure that the action of the employee was closely related to his duty as an employee. By this doctrine, Top Tooling Plc can be held vicariously liable for the action of its employee, Peter Mathews.

Pedestrian

Through vicarious liability, the pedestrian can sue Top Tooling Plc for the injuries caused. The main challenge here would be to show that the accident occurred in the course of duty. In the fact of the case, the van was for work use only. During the day of the accident, it is clear that Peter had finished doing his work early, but he took another job, which he was not initially employed for. The accident with the pedestrian is closely related to the extra job that Peter had undertaken that of fixing the climate control system. Then employee goes further to watch a Liverpool FC match and the accident happens on his way back.  The test in this case will be like what the court said in Joel v Morison: if the servants, being on their master’s business, took a detour to call upon a friend, the master will be responsible ... but if he was going on frolic of his own ... the master will not be liable”. As it can be seen from the case, the extra work was sanctioned by Peter’s boss, meaning that he was doing it on behalf of the company The Liverpool FC match is also closely connected to the work since it was to thank the employee. In that case, the court may hold the employer liable.

Sideline (automation) Ltd

            Sideline (automation) ltd may have a claim against Tooling Plc for vicarious liability. Although the extra work that peter was doing at the company was not within his scope of employment, it was sanctioned by his boss. He was not doing for his own benefit. It could be different if Peter could have conspired with Pardeep to do the extra work out of his company’s knowledge.

Frozone

Under the principle of vicarious liability Frozone may sue Top Tooling Plc for any cost that may be involved in the restoration of the climate control system. In all these cases, it is clear that even though the extra work Peter was doing was not within his scope of employment, it was sanctioned by his boss, and more so closely related to his responsibilities. The most important test in all cases is to find how the extra work was closely linked to the employee’s duty(). The fact that Peter had to call his boss also show that the Top Tooling plc was in control of its employee action and therefore makes it vicariously liable for any outcome ().

Task 8: Trespasser

Case A

The duties that an occupier owes to a trespasser are established by the Occupiers’ Liability Act 1984. According to this Act, an occupier of premises owe a trespasser a duty of care if he is aware of the danger and has reasonable ground to believe that it exist, knows that the trespasser is in the vicinity of the danger, the occupier is reasonably expected to avoid the risk.

Basing on the above conditions and the fact of the case, it appears that Smith has no claim against the owners of the holiday park. The owners did not know about the risk neither was there any previous accident to suggest of the risk. More importantly, there was no reason to judge the fence as inadequate. Like in Donoghue v Folkestone properties Ltd  this case will determined having regard to all these circumstances. Having fenced the park, it is likely that holiday park will be judged to have discharged its standard duty of care (Revil v Newbery; Tatcliff v McConnell). However, since Smith is a “young man”, the court will also look at his age and the level of understanding (Titchener v British Railways Board; Jolley v Sutton). This is because of the reason that an occupier should expect young people to be less careful than adults.

Case B

In light of the Occupiers’ Liability Act 1984, the council owed a duty of care to Allen. Since the council was are of the danger, and knew that Allen was in the habit of swimming in the harbour during the summer, as Section 1(3) of the Act says, it had a duty of care. In this case therefore, the council had the reason to believe that the obstruction had the capacity to cause injury and new that Allen or any other person was likely to trespass. The duty to take care is further strengthened by the fact that the trespass involved an attractive property- swimming pool. When a trespass involves an attractive property that has the capacity to attract uninvited visitors the court will likely see a duty of care (Taylor v Glasgow City Council; Tomlinson v Congleton). However, the council could avoid the liability if it had placed a warning sign at the pool (Roles v Nathan). May be to warn any person of the impending danger and to notify them of the obstruction (White v Blackmore).

Task 9: Negligence

Case A

Yes, Bill can be sued for negligence. Careless driving is regarded as driving without due care and it puts the lives of innocent person at risk. Drivers convicted of careless driving are liable to pay damages.

Alternatively, XYZ dairies can be held vicariously liable. Although Bill was engaging the 14 year old boy contrary to rules of the company, the company knew of the violation of the rules and deed nothing to stop the violation. Turning a blind eye to the violation of the rules makes the employer culpable. In this case, it is expected that by being employer, XYZ could have exercised their control to stop the violation. But the fact that the employer failed to act make him responsible. What will be required in this case is to show that there was a close connection between what Bill was doing and what he was employed to do. Since the boy was injured in the course of delivering milk, it is likely that the court will see this as within the scope of employment and hold XYZ vicariously liable. The fact that the company knew about the boy engagement erodes any defence the company could had. This however, does not mean that Bill escapes liability, the employer can demand they be joined together in the suit (Kelly, et al 2014)

Case B

Yes, the owner of the museum can be held liable. It is the owner who authorised the friend to drive the vintage bus. By law, the owner is expected to take responsibility for his actions. The important issue in this case is whether the friend was authorised (Beard -v- London General Omnibus Company). Authorisation makes the owner liable. Secondly, the court will also be interested to know the nature of the relationship between the person causing the injury and the owner. In this case, the person causing the injury is a friend of the owner. So there is a relationship. The friendship relationship holds the owner liable for the damage. The case could have been different if the friend could have taken the car on his own volition. But in this case, the friend was acting on behalf of the owner, and doing a job on which the owner should have employed someone else to do. That makes the owner negligent and responsible for his own actions, that of directing using friends as employees.

  

List of references

Beard -v- London General Omnibus Company; CA 1900

Cartwright, J (2014) Contract Law: An Introduction to the English Law of Contract for the Civil Lawyer. London: A&C Black

Doe v. Bennett, 2004 SCC 17

Donoghue v Folkestone properties Ltd [2003] EWCA Civ 231

Hong Kong Fir shipping v Kawasaki Kisen Kaisha

JGE v The English Province of Our Lady of Charity

Joel v Morison [1834] EWHC KB J39

Jolley v Sutton [2000] 1 WLR 1082

Kelly, D et al (2014) Business Law. London: Routledge

Lim, T (2012) Essence of Time in Construction Contracts. Australian journal of Construction Economics and building Vol. 9(2): 1-7

Limpus v London General Omnibus Co [1862]

Macmillan C & Stone, R (2012) Elements of the law of contract. London: University of London

Occupiers’ Liability Act 1984

R v Chargot Ltd [2008] UKHL 73

Ratcliff v McConnell {1997] EWCA Civ 2679

Revil v Newbery [1996] 2 WLR 239

Roles v Nathan {1963] 1 WLR 1117

Rose v Plenty [1976] 1 WLR 141

Short v J W Henderson Ltd (1946) 62 TLR 427

Taylor v Glasow City Council [1922] 1 AC 44

Titchener v British Railways Board [1983] 1 WR 1427

Tomlinson v Congleton {2003] 3 WLR 705

White v Blackmore [1972] 3 WLR 296

Yewens v Noakes (1881) 6 QBD 530

Yewens v Noakes (1881) 6 QBD 530

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