Task 01

1.1. essential elements of valid contract according to contract law.

A contract is a legally binding or valid agreement between two parties. A contract is an agreement which will enforced by the law. This Definition is satisfied when the following elements are present:

There must be an agreement. Since nobody can agree with himself (though he may resolve to do or do an act), there must be at least two parties to an agreement. One of them will make an offer, and other in every respect, there is agreement between the parties.

The parties must intend their agreement to result in legal relations. This means that the parties must intend that if one of them fails to fulfil a promise undertaken by the agreement, he shall be answerable for that failure in law. It is evident that not all agreement is intend to produce legal consequences.

• English law is not content with these two requirements. It requires further that either consideration must be present or that the contract should be in a deed.

• The parties must have capacity to contract.

• The reality of the contract must not be affected by circumstances which render the contract unenforceable, voidable, void or illegal.(charlesworth’s business law fifteenth edition Paul Dobson Clive M.Schmitthoff p.3)

The essence of contract is that there should be an agreement between the contracting parties. This agreement is normally constituted by one party making an offer and the other indicating its acceptance. The acceptance must correspond to the offer in all material aspects. The negotiations between the parties need not always lead to a contract. Inquiries may be made or offers invited but no offer may be made or, if one is made, it need not be accepted. Before the concepts of offer and acceptance can be considered in detail, it is necessary to distinguish certain statements preliminary to the offer from the offer itself. (Charlesworth’s business law fifteenth edition Paul Dobson Clive M.Schmitthoff p.11)

Offer

An offer is a definite promise to be bound by specific terms. It can be defined as–an n expressed or implied statement of the terms on which the maker is prepared to be contractually bound if it is accepted unconditionally. An offer can be made to a single individual, to a class of person or even to the world at large. The offer can be accepted only by the person or one of the persons to whom it is made to. The person who makes the offer is referred to as the “offeror” and the person to whom the offer is made to is referred to as the “offeree”

XJF872807 Advertisement for the Carbolic Smoke Ball Company, 1893 (engraving) by English School, (19th century); Private Collection; (add.info.: Published in “The Illustrated London News”, 10th June 1893); English, out of copyright

The Acceptance

‘A positive act by a person to whom an offer has been made which, if unconditional, bring a binding contract into effect.’ The contract comes into effect once the offeree has accepted the terms presented to them. This is the point of no return; after acceptance, the offeror cannot withdraw their offer and both parties will be bound by the terms that they have agreed. Acceptance may be by express words, by action or inferred from conduct. (Charlesworth’s business law fifteenth edition Paul Dobson Clive M.Schmitthoff p.17)

Consideration

Consideration is an essential part of most contracts. It is what each party brings to contract. A valuable consideration in the sense of the law may consist either in some right, interest, and profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other. “From Currie v Misa 1875”

 

  • Consideration may be executed (an act in return for a promise) or Executory (a promise in return for a promise). It may not be past, unless one of three recognized expectations applies.
  • There are two broad types of valid consideration – executed and Executory. If consideration is past then it is not enforceable.
  • Executed consideration is an act in return for a promise. The consideration for the promise is a performed, or executed, act.
  • An offers reward for the return of lost property, his promise becomes binding when B performs the act of returning A’s property to him. A is not bound to pay anything to anyone until the prescribed act is done. Therefore in Carlill’s case, the claimant’s act, in response to the smoke ball company’s promise of reward. (ACCA, Corporate & business law p.68)

Intention to create legal relations

An agreement will only become a legally binding contract if the parties indented this to be so this will be strongly presumed in the case of business agreement but not presumed if the agreement is of a friendly social or domestic nature.

  • Legal capacity of the parties to act

Not all people are completely free to enter into a valid contract. The contracts of the groups of people listed below involve problematic consent:

  • People who have a mental impairment;
  • Young people (minors);
  • Bankrupts;
  • Corporations (people acting on behalf of a company); and prisoners.

Task 02

2.1. guidance for Mrs. Helen to claim the reward

An offer is an expression of a willingness to contract on certain terms made with the intention

that a binding agreement will exist once the offer is accepted. Therefore even an advertisement can be regarded as an offer specially when a reward in honour of breaching the promised services of a product is involved.

The task of a plaintiff seeking to enforce a contract is to prove the existence of an

offer. An offer may be made either orally or in writing, or implied by the conduct of the

person making the offer, namely, the offeror. Furthermore, the offer may be made to a

specific person or group of persons or to the world at large. In the now famous case of

Carlill v Carbolic Smoke Ball Co. [1893] 1 QB 256, it was argued that it was not possible

to make an offer to the world at large.

Carlill v Carbolic Smoke Ball Co. [1893] 1 QB 256

In this case the plaintiff bought a medical preparation called ‘The Carbolic Smoke Ball’ on the

basis that the defendants advertised that they would pay £100 to any person who contracted

influenza after using the smoke ball in the prescribed manner and for a specified period.

Further, the defendants stated that ‘to show their sincerity’ they had deposited £1,000 with the

Alliance Bank. The plaintiff bought one of the smoke balls and used it in the manner prescribed

and promptly caught influenza! She sued for the £100. The defendants contended that

there was no agreement between them and used considerable ingenuity in promoting this

contention. One of the defences used was that it was not possible to make an offer to the whole

world since this would enable the whole world to accept the offer, which was clearly beyond

the realms of commercial reality. The Court of Appeal had no difficulty in rejecting this

defence. Bowen LJ stated the position very clearly as follows:

It was also said that the contract is made with the whole world – that is, with everybody and that

you cannot contract with everybody. It is not a contract made with all the world. There is thefallacy of the argument. It is an offer made to all the world; and why should not an offer be

made to all the world which is to ripen into a contract with anybody who comes forward and

performs the condition? . . . Although the offer is made to the world, the contract is made with

that limited portion of the public who come forward and perform the condition on the faith of the

advertisement.

The defendants also contended that the plaintiff had not accepted their offer and therefore

there was no consensus ad idem and thus no agreement. This defence, which was rejected,

exposes the fact that offers may arise in two forms, either bilateral or unilateral. A bilateral

offer arises where one party promises to do something in return for a promise made by the

offeree. Both parties are agreeing to do something in return for some reciprocal promise from the other.

A unilateral offer occurs where one party, the offeror, promises to pay for the act of

another, that is, a conditional promise. The acceptance of the offer takes place when the

offeree performs the act in question. The offer here is said to be unilateral because only

one party is making a promise. The facts of the Carlill case provide an obvious example

of such an offer which goes on to assert that Mrs. Helen who has come forward to take up an offer advertised by the Ever Shine detergent powder company regarding their new product branded as “Ever Bright” is entitled to the reward of GBP

1000/- which the company has further cemented by depositing 10,000 GBP with their bankers as dedicated for reward money.

2.2. The ways in which the contract has been breached and the options available to Primark

a contract is formed on agreed terms between the parties who are getting into the agreement. Here the terms and the considerations has already been decided and no clause has been put in, as to change in either because of unforeseen circumstances, and since when entering into a contract the parties are into a mutual obligation to complete the given work within the stipulated time,

Since Marigold garment has failed to fulfil its terms as per the agreement specially when Primark has already fulfilled their terms by paying the garment 10% of the full payment for the order, Primark can refuse to pay on the basis of breach of duty or the mutual obligation by the other part – Contract Law

the Contract Law provides provisions for the plaintiff if there is a breach of duty by the defendant, and hence gives provisions for the plaintiff to act in a certain manner when the duty has not been fulfilled. Hence there are reasons which Primark can to refuse to pay the remaining amount for the shirts as the assigned order was not done according to the terms of the contract because less number of shirts (3000) instead of the agreed (5000) and the provided shirts were lower in quality in comparison with the sample provided prior to signing the contract.

Task 03

3.1 Differences between tort liability and contractual liability with case law.

Winfield defined tortuous liability as follows: “Tortious liability arises from the breach of a duty primarily fixed by law; this duty is towards persons generally and its breach is repressible by an action for un liquidated damages” The main purpose served by the definition is to distinguish the law of torts from other branch of the law.

A contractual obligation differs in nature from a delictual obligation in three aspects. Firstly contractual obligations arise only from agreement between parties. However, delictual obligations are contractual obligations that are imposed by law on the party bound. Secondly, duties arising from contract are owed to the parties to the contract (or their assignees), whereas delictual obligations are owed to a large and indeterminate class of persons. Thirdly, a delictual obligation imposes negative duties, while a contractual obligation may impose positive or negative duties.

According to Winfield one distinction between the law of tort and the law of contract is that the scope of the rights and duties of parties in the former is wider than in the latter. In case of torts and duties are imposed by law and are owed to persons in general while in the case of contracts the duty is created by prior consent and agreement by the parties and is owed by one party to the other. However, such a general statement must necessarily be qualified in some respects. There are several instances where the prior consent of the defendant is a relevant factor in cases of tortuous liability. Under the English occupiers Liability Act of 1957, a distinction is drawn between the duty owed by an occupier to a trespasser and that owed by him to a visitor whom he has permitted to enter his premises.

Conversely, in the law of contracts the increased use of standard form contracts and ‘implied terms’ which the law deems the parties to have agreed to, has to a great extent eroded the true freedom of the parties to make independent decisions regarding the terms of such contracts. Therefore, the parties may find themselves bound by terms imposed on them by the law rather than by prior agreement between them. However, we could argue on the other hand that no person is bound by a contract against his will, may find himself subject to terms imposed by the law rather than the agreed terms of the contract alone.

We could also argue that in spite of the increased use of standard of the contract is still determined by agreement between the parties.

We can see a further distinction between the law of tort and contract when we examine the aims of these two branches of law. The primary aim of the law of tort is to grant redress or compensation to the victim of a tort for the harm caused to him. In other words the law seeks to put him as far as possible in the same position as if he had not suffered any damage or injury.

  • The aim of the law of contract on the other hand is to enforce the promises made by one party to the other, and in the event that this is not possible, to grant damages to the latter, or in other words put him as far as possible in the same position as if the contract had been performed. However, this distinction too has been somewhat blurred in recent times and it is now possible for a plaintiff to bring an action in both tort and contract on the same facts. In the law of contract the rule that a promise is not legally binding without either consideration or the formality of a seal has been relaxed in many instances and in the area of tort several cases have held that a negligent defendant is liable even though he has not caused damage to the plaintiff by any positive act [Rose v Caunters where a solicitor who negligently executed a will was held liable to a disappointed legatee].

3.2. negligence in law of tort and other associated concepts

The concept of negligence or culpa is one of the foundations of the Aqulian acting on the Roman Dutch law. In the English law however, it is of much later origin. The early common law concentrated almost entirely on intentional harm and moreover was more concentrated with the nature of the injury caused then with the basis of the defendant’s conduct. so long as the loss or injury was of a kind recognized in law as being compensable, it was immaterial whether it was caused through the defendant’s intentional or negligent misconduct.

Negligence is not a tort in itself but a basis of liability in Tortious actions, it may be defined as” the failure to exercise towards another, in given circumstances that degree of care which the law considers that a reasonable man should exercise in these circumstances”

In order to establish negligence as a Cause of Action under the law of TORTS, a plaintiff must prove that the defendant had a duty to the plaintiff, the defendant breached that duty by failing to the required standard of conduct, the defendant’s negligent conduct was the cause of the harm to the plaintiff, and the plaintiff was, in fact, harmed or damaged.

3.3 vicarious liability and its role in the business context.

The doctrine of vicarious liability generally operates within the law of torts. It has become well-established in English law and historically has been called “Master and Servant liability,” which clearly indicates the circumstances in which the doctrine becomes applicable in tort law.

The general rule in tort law is that a person who authorizes a tort will personally be liable for damage or harm as a result. However, vicarious liability defines the circumstances in which a person is liable for the torts of another without express authorization or ratification. The most common example of vicarious liability is the liability of an employer for the torts of his employees committed in the course of employment. It is not necessary in such circumstances for the employer to have breached any duty that was owed to the injured party, and therefore it operates as strict or no-fault liability. It is possible that the injured party could be either an employee or a stranger, and the employer can be held vicariously liable in both situations. The most important element to establishing a case for vicarious liability is that the wrongdoer be acting as a servant or employee, and that the wrong done be connected to the employee’s course of employment. Vicarious liability can only be imposed if it is proved that the employee was acting “in the course of employment.” This criterion is essential, and requires a clear connection between the employment duties and the employee’s acts complained of. As such, most employers will be insured in order to avoid such liability. In addition, in order to establish vicarious liability, it is necessary to show that an employee was employed under a contract of service, or in the case of an independent contractor, a contract for services. English law has also established that an employer can be held vicariously liable for a breach of statutory duty by an employee, for example in circumstances such harassment or bullying within the workplace.

Vicarious liability “in the course of employment” The principle of vicarious liability is only applicable in the case of servants and not in the case of independent contractors. For an employer to be held liable, the wrong must be committed “within the course of employment.” This criterion is a question of fact, and it is immaterial whether the wrong committed by the employee was authorised or not. An employer will only avoid liability in this situation if it can be shown that an employee acted “on a frolic of his own,” or in other words, if the employee acted in a way that was unconnected with his employment. Recently, the courts have been willing to impose liability in far-reaching circumstances on the issue of whether the wrong was committed “in the course of employment.” Important in this context is the case of Lister v. Hesley Hall Ltd. This case establishes that an employer cannot avoid liability by showing that an employee engaged in an intentional and unauthorised wrongdoing. Thus, the important factor in establishing vicarious liability is the connection with the “course of employment.” However, it is important to note that an employer cannot avoid liability if an employee acts in a way that could be described as “incidental” to his employment and the duties to which he is entrusted with. Therefore, in establishing whether vicarious liability exists, the question to be asked is firstly, whether the act complained of was committed “in the course of employment” and secondly, whether the act is reasonably “incidental” to the employee’s employment duties. If there is a connection, it is irrelevant whether the employee’s act was unauthorised. In the wake of Lister, a more recent trend has been to impose liability upon an employer for violent acts committed by employees.

Task 04

4.1. Assessing the capacity for Fudix to claim damages from Kingston according to rules on tort of negligence.

The rules of tort of negligence posits that even without a contractual obligation / relationship, a damage can be claimed if substantial.

In the 1932 case of Donoghue v Stevenson, the House of Lords decided that a person should be able to sue another who caused them loss or damage even if there is no contractual relationship.

A useful case in this respect is Caparo Industries plc v Dickman (1990). Here, the claimants were shareholders in a company and the defendants were the company’s auditors. The claimants relied on the audited accounts and purchased more shares with a view to making a takeover bid. Having taken over the company, the claimants discovered that the company had in fact made a £400,000 loss rather than the £1.2m profit shown by the financial statements. The House of Lords held that the requirements for a duty of care to exist were as follows:

the harm must be reasonably foreseeable

there must be proximity between the claimant and the defendant

it must be just, fair and reasonable to impose a duty of care on the defendant.

Although Kingston Associates have expressly declared that they will not hold the liability for the information provided for Fudix the tort rules of negligence applies under the duty of care as specified above This is further asserted by the existence of the so-called ‘special relationship’. This was first established in Hedley Byrne & Co Ltd v Heller and Partners (1963). Bear in mind that the question of a special relationship is likely to be relevant where the claimant does not have a contractual relationship with the professional providing the advice.

In Hedley Byrne itself, the claimant provided services on credit to a client. It did so on the basis of a credit reference given by the defendant, the client’s bank. Note that there was a contract between the claimant and the client and a contract between the client and the bank, but no contract between the claimant and the bank. The defendant was able to avoid liability by relying on an exclusion clause contained in the credit reference. However, had the clause not been present, the defendant would have been liable because it had used its special skill to provide a statement to the claimant in the knowledge that the claimant would rely on this.

Similar information related cases such as Shaddock & Associates v Parramatta City Co can be cited as legal precedents with this regard.

4.2. Determining whether Wetton is vicariously liable for the action of John.

Vicarious liability indicates a situation where someone is liable for the acts of another person. In this business scenario, John has been employed by Wetton and was appointed as the supervisor to conduct and oversee the cleaning team at Woolworth super store. This appointment signifies that he has been authorized to undertake his duties by Wetton and hence anyone employed by him or for his support can also be held liable to the damages occurred.

A case that can be sited with this regard is Beard v London General Omnibus Co 1900 (b)

References

  • k.t chitrasiri,2004, law of contract
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  • Richard Stone,2002, The Modern Law of Contract
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