Unit 22 Aspects of Contract and Negligence for Business UKCBC Level 6


Contract is defined as a voluntary agreement among different parties that is mainly in the written format that consists of different terms and conditions that are mutually agrees by the parties. The proper written contract and enforced by the government is consider as the valid and legal in the eye of law. Therefore, it is stated that legal and valid contract among the parties support and protect the rights of innocent parties from the wrongful and biased activities. The UK law basically focuses on contract law as well as tort law that avoid the negligence activities among the parties. For conducting the present report different case scenario has been chosen that support in gaining insight knowledge regarding various essential elements that are essential or required for formulating valid contract. Along with this, several other case scenarios has been also understood that support in gaining and analyzing the different terms that are used in the valid contract. On the other hand, report also focuses on contrasting different liabilities that are liability in tort with the contractual liability with measuring their certain similarities. Lastly, the report will also measure different defenses in negligence as well as situation of vicarious liability.

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Task 1


Through considering the case scenario, Peter Abraham self contractor builder and he is aware regarding suing the clients at the time breach of contract. But Peter has little knowledge regarding the formation of valid contract. Thus, the term valid contract can be explained as verbal or written agreement among two or more parties in which parties mutually agrees to certain terms that need to be binding on both the parties. Whereas, there are different elements that is required by parties to enter into the valid contract it mainly include following-

  • Offer and acceptance: The key element requires for formulating the valid contract include offer and acceptance of the terms and conditions. Offer provided by the offerer must be clear and it must be to the general public. On the other hand, acceptance is response of the offer made by other person (Olugasa, 2015). The importance of offer and acceptance within the contract is that with engaging in proper offer and acceptance parties are bind to follow them as it ensure giving something and other person receives it. Along with this, significance of this element also ensures that both the parties are agreed to the stated terms.
  • Intention to create legal relationship: Another key element requires for formulating the valid contract includes the parties those who have been agreed to formulate the contract must have legal intention to create relationship. A party to the contract having intention to engage in illegal activities then it is not termed as valid contract in the eye of law (Fried, 2015). The social as well as domestic agreements are excluded from the categories as in this parties intend to create legal relationship. The importance of this element in formation of valid contract is that this element ensures pursuing legal intention among the parties.
  • Capacity of parties:Another element that is required for the valid contract in business context includes capacity or competency of parties. This element within the contract depicts that parties those who are agreeing to the agreement must be competent that is they must have attain the age limit of 18 years, must be of sound mind etc. are eligible for formulating the contract (Lipshaw, 2016). The importance of this element to the contract is that parties with unsound mind or lunatic or minors are excluded from binding the contract.


Through considering the case scenario of Peter Abraham the self employed building contractor must engage in forming different types of contract with different parties. The building contractor engage with various parties that mainly include their clients, labourers that support in constructing the building, suppliers with whom they purchases the raw material or other suppliers to whom they acquire the machines for engaging in the construction purpose (Pandey, 2013). Therefore, to connect with all the different clients and customers Peter Abraham must focuses on formulating different types of contract that mainly include-

  • Face to face contract: The foremost type of contract that is formulated by Peter Abraham include face to face contract in which the parties are engaged in face to face agreement. In this type of contract parties to the contract are physically present at the time of formulating the contract. This type of contract is mainly formulated with the labourers that render services in constructing the building. The positive impact of face to face contract is that it outcome in responding quickly to the terms and condition. On the other hand, negative impact of formulating face to face contract is that at the time of fraud activities innocent party cannot claim for the compensation as no evidence is present that parties have been engaged in the valid contract.
  • Written contract: Another type of contract in which Peter Abraham may engage is written contract one of the most common forms of contract that is used in the business context. While engaging with their customer Peter Abraham must focuses on this form of contract. In which both the party’s customers as well as Peter Abraham building contractor engage in signing the written deed and agreement that consists of all the terms and condition that must be fulfilled by building contractor. The impact of written contract is it is consider as the valid evidence in the situation when one party breaches the terms and condition and they are accountable to give compensation of the same (Cobert, 2014).
  • Distant contract:This type of contract is also applied in the context of Peter Abraham as to formulate contract with their different supplier they must engage in formulating distant selling contract. The distant contract must be formulated via telephone, letter or email medium.


In order to formulate valid contract parties need to focus on different terms within the written deed or agreement as they are consider as the key basis on which the whole contract is formulated. The different terms that are included within the contract include following-

  • Condition- The key terms within the contract are termed as condition these are the key ground on the basis of which contract is formulated. Parties within the contract mutually give consent to certain conditions and terms that are imposed or expressed within the contract on the basis of which parties perform their activities to mutually benefit them (Hesselink, 2015). In the situation of breaching the condition party is eligible to terminate the contract as well as claim for the damages.
  • Warranty- Another essential expressed term within contract is warranty it is defined as an ancillary term within the contract that supports the condition. In the situation party breaches the warranty terms then such circumstances parties are not entitled to repudiate the contract as they are liable to claim compensation or remedies for the breach of warranties.
  • Innominate terms- These are the other terms within contract that are not term as condition nor are they termed as the warranties. These terms are considered as the different in various situations. The impact of Innominate terms are decided by the court and parties need to abide the judgement.
  • Exclusion clause- Another essential term within the contract are exclusion clause or exemption clause. These clause or terms are entered by the party to eliminate their liability from providing remedies or compensation for any damages or injury to the other party (Cunningham, 2013). The impact of exclusion clause is that party obviate their responsibilities regarding providing the damages or remedies.

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Task 2- Case Study


Case 1- Agreement

The scenario states that Carol has perused the online website that is Gumtree where he has seen the advertisement of brown leather couch. Which she intended to purchase for their unfurnished apartment. The online classified ad also have information related with seller and their mail ID through which Carol can make order to purchase the couch. Carol mail the seller regarding purchasing of the couch. Therefore, in this case Carol have a contract with the seller as it addressed different elements of contract that support them in bidding the contract.

The foremost element of contract within the scenario is offer and acceptance within the scenario, as the Gumtree online website has offer the leather couch on the website to the general public. The online offer is accepted by Carol and she has demonstrate the consent of purchasing through emailing the seller.

Case 2- Consideration

The case scenario states that Devi was temporary working in the IT firm and was independent person and wishes no interference of his father in his life. The firm has decided to hire Devi on the permanent basis and his father was not aware of this fact. Unaware of the situation that firm has hired his son Preston has mailed letter to George stating that he would give £150,000 to firm if they will hire their son. In this case scenario Preston Devi's father is engaging in providing them illegal consideration to George that in not effective in formulating the valid contract.


Case 3- Exclusion clause

The case scenario states that couple went to have dinner in the restaurant where he handed the overcoat to doormen and had taken receipt on the exchange. The receipt provided by the doormen have exclusion clause that clearly demonstrate that restaurant is not liable for compensating to the valuable items and product that has been stolen from the jacket. After completing the dinner man was just about to pay for the bill he realizes that he forgot to take his wallet that contain £500. When he went to collect his wallet he found that someone has stolen the money. He went to restaurant manager for taking refund then manager clearly states to the exclusion clause that was mentioned on the back side of ticket.

Through considering the scenario, restaurant owner is not liable for the providing them refund to the stolen money as he has mentioned the clause on the ticket and it clearly excludes the restaurant liability to pay for the compensation.

Case 4- Implied terms

The case scenario states that Aaron has purchased warehouse from the Zehphra and was not occupied for the long time period. After some time improvement was made in the warehouse. Zehphra while lending warehouse has promised him to not increase the rent of warehouse for next 10 years but after the year he died. The property was inherited to Yeti and she increases the rent of warehouse. Therefore, Aaron refuses to pay the increased rent and has submitted the bill claiming compensation for the expenses incurred by him.

Through considering the scenario Aaron is not entitled to the compensation for his expenses as it was not mentioned in the tenancy agreement. On the other hand, expenses done on the warehouse for the personal satisfaction of individual (Rhee, 2013). Therefore, Aaron is not entitled to gain any of the compensation.


Case 5

The case states that policyholder has applied for motor insurance policy where he was asked to fill the insurance form. The form asked certain question that is insurance holder has been engaged in any sort of past accident or claim for the faulty or non-faulty claim during the past five years (Goeringer, 2015). The insurance holder has answer no to the question. In the circumstance the policy holder car was stolen in which it was investigate that insurer in the past year has claim the theft claim for the stolen car.

Thus, considering this situation insurance company has right to void the insurance policy from the starting date as the insurance holder has not clearly stated that in the past year he has made the theft claim of his stolen car. Along with this, he has also wrongly answer in the form that he has not engaged in any sort of claim in the past years.

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Task 3- Vocational Scenario


According to the UK law there are basically different civil law that is Tort law and Contractual law. Both the law has different liabilities that need to accomplish for attaining the validity. There are certain similarities among both the laws that are Contractual law and tort law both mainly concern towards supporting the interest of innocent parties from the unethical or wrong activities performed by the other party. Along with this, another similarity among both the liabilities and law is that both the law assists in providing proper remedies for the injury and damages caused to the innocent party by the activities of guilty party (Jqder, 2014). Despite of similarities there are certain differences among both the liabilities that are enumerated as follows-

Ground of differences

Contractual liability

Tort liability


The contractual liability arises in the situation when the parties in contractual agreement breaches or terminate the conditions that are expressed within the agreement.

On the other hand, tort liability arises in the situation when party engage in tortuous or neglectful actions that results in causing damages or injury to the other party.

Basis for providing damages

Under contractual liability damages are provided on the basis of conditions that are imposed within the agreement regarding non fulfilment of stated terms in the contract.

Under tort liability the damages are provided by the court after reviewing the intensity of injury or damage caused to the party.

Relationship among the different parties

Under contractual liability parties have existing relationship on the basis of which they are entitled for the contractual liability. Parties have been engaged in the contractual relationship.

On the other hand, in tort liability there is not relationship among different parties. Court decide the relationship of parties and then provide the judgement.

Case example

The case example of contractual liability include Hochster v De la Tour (1853) 2 E & B 678.

On the other hand, tort liability can be understood through referring the case scenario of Topp v London Country Bus[1993] 1 WLR 976.


Nature of negligence

The nature of negligence often arises in the situation when the individual perform wrong activities and actions that lead to cause injury or damages to the other party. Along with this, the key aim of the negligence law is to enforce duty or social control so that individual may perform their activities in the proper and effective manner so that they can easily avoid the breach of their duties. In the circumstances if party is unable to perform their activities in proper manner then in such situation they are accountable for providing compensation and remedies to the claimant (da Jesus Silva and, 2013). The case of Donoughue vs Stevensoncan be cited in order to identify the principle of negligence.

Principles of Negligence:

  • Duty of care- The foremost principle within the negligence include focusing on performing their duty with care so that they may not engage in the any wrong activities that lead to cause serious injury to the other party (Kilner, 2014). Through considering the case scenario it was the duty of Donoghue to review the manufacturing and packaging of beer.
  • Breach of duty- Another principle within the negligence include breach of duty by the party that lead to the injury to other party. In the cited case beer manufacturer has terminate their duty that is they have not take care while manufacturing the beer.
  • Causation- Another principle of negligence include causation that include injury to the party must have been attained through the significant cause (Twomey, Jennings and Greene, 2016). Therefore, this principle of negligence must ensure causing injury to the party by the wrong activities performed by the defendant.
  • Foreseeability- The last principle within the negligence include foreseeability that is damages or injury to the claimant party must be anticipated with the activities that is committed by the wrong party.


Vicarious liability

UK government had focused on imposing the doctrine of vicarious liability it is consider as a strict law in which the employer or the owner is liable or accountable for all the actions and activities performed by their staff or employees within the employment period (Abraham and White, 2016). Along with this, through considering this legal doctrine business organization is accountable and answerable for all the tortuous and wrong activities performed by their staff members.

The business organization can become vicariously liable in the different situation such as-

  • When the employee or staff perform the wrong activities when they are in the employment period (Vicarious Liability,2015).
  • On the other hand, business is also liable in the situation when individual perform neglectful activities as the employee within an organization.

The term vicarious liability can understood through considering the case scenario of Imperial Chemical Industries Ltd v Shatwell [1965] AC 656. In this lawsuit, demand of vicarious liability was held successful by the legal authorities as employee or staff within the industry has performed the tortuous activities despite of knowing the fact that it may lead to the harm or injury to the other party (Kilner, 2014). Along with this activity was also in influence of employer in the course of employment.

On the other hand, another example of vicarious liability include Lister v Hesley Hall Ltd. [2001] UKHL 22in this case court has successfully impose the doctrine of vicarious liability as it was found the staff or employees were engaged in the activities of sexual abuse within the employment period. Therefore, it ensure precluding recovery from the employer or owner.

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Task 4- Case Study


Case 7

Through considering the case scenario Mr. Brown had complaint of chest pain as well as unable to breath properly therefore, he went to Goodmayes hospital. Where he was seen by the nurse and she call the doctor on duty. Without seeing the patient doctor has prescribed the pain killer. Later the day Mr. Brown died from pneumonia that was caused from in-taking the toxic mould in his house.

  1. a) With the help of considering the above case the hospital can be held liable for negligence if the patient died from the pain killer provided by the nurse. But it was found that patient died from pneumonia that is through in-taking toxic substance in the home (Zillman, Simmons and Gregory, 2015). In the circumstance if patient died from the pain killer prescribed by the doctor then in such situation hospital can be held liable. As, the doctor was on duty and do not perform their activities in the effective manner.
  2. b) On the other hand, hospital cannot be held liable or responsible for the negligence action of the doctor as the actual reason for death was due to in-taking of the toxic mould in his house therefore, in this situation hospital is not liable.


Case 8

The case scenario states that Chauffeur company has sent driver to the airport to pick up their client. While waiting for the client at the airport driver decides and have few glasses of alcohol at the airport. While taking clients and moving ahead to the hotel driver crash the car to the lamp post and engage in injury to client. After that investigation was executed and it was found that driver was intoxicated and was also driving the car over the standard speed (Contract. 2006).

Now, the client has sued the Chauffeur company for the negligence and wrong activities performed by their driver. Therefore, considering the case scenario Chauffeur company is vicariously liable and accountable for the activities and action performed by their employees. Along with this there are certain element of vicarious liability addressed in the case scenario that mainly include driver has engaged in the drinking activities during the employment period as he was sent to airport for picking up their clients.

Case 9

The case stated that driver of the supermarket was loading pallet into the truck and suddenly the pallet fall off and engage in the causing serious injury to the other colleagues and trespasser that results in several months of treatment and rehabilitation (Hernandez, K., 2010). After the recovery individual sue supermarket for the activities of their driver but supermarket exclude themselves from the obligation through stating that at the time of accident the health and safety in-charge was given to the third party.

Through considering the scenario supermarket owner will be accountable for compensating to the injury that has been caused to the party by the action of their driver. Accordant with the Occupier Liability Act the employer or owner is accountable for the physically injury that has been caused to the individual.


From the aforementioned report it is summarizes that to engage in formulating the valid contract among the different parties it is essential to focus on the different aspects of the contract. Along with this, essential elements has been also taken into the consideration by the parties that mainly include offer and acceptance, capacity of the parties, intention of the parties etc. that impose valid contractual agreement. On the other hand, the report has also concluded analysing different essential elements within the contractual agreement that mainly include expressed terms, implied terms as well as exclusion clause that is significant for the contract.

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Books and Journals

  • Abraham, K. S. and White, G. E., 2016. The Transformation of the Civil Trial and the Emergence of American Tort Law.
  • Cobert, E. 0., 2014. Illusory Aspect of Corporate Contract to Repurchase Stock.iSt. John's Law Review.) 12(1). p.9.
  • Cunningham, T., 2013. The Relevance of the Contract Administrator's Certificates under the Principle Forms of Irish Building Contract.
  • da Jesus Silva, L. C. and, 2013. Strategic of Remuneration in Public Management: Inefficiency of the Programs as a Result of Theoretical Negligence. China-USA Business Review. 12(5).
  • Fried, C., 2015. Contract as promise: A them), of contractual obligation. Oxford University Press, USA.
  • Goeringer, P., 2015. Contributory Negligence and Assumption of the Risk Offer Two Potential Defenses for Maryland Agricultural Operations.
  • Hesselink, M.W., 2015. Democratic contract law.lEttropean Review of Contract Law.111(2). pp.81 -126.
  • Jqder, M., 2014. Tort of negligence: Home Office vs. Dorset Yacht case.Docs. school Publications.
  • Kilner, T., 2014. When Discharging a Patient at Scene Can Lead to a Claim of Clinical Negligence.
  • Lipshaw, J. M., 2016. Lexical Opprotunism and the Limits of Contract Theory.U. Cin. L. Rev..184. p.217.
  • Olugasa, 0. A., 2015. Anticipating Privity in E-Contract in Nigeria.jAvailable at SSRN.
  • Pandey, A., 2013. Doctrine of Privity of Contract Under Indian Law: Should it Be Abolished in Toto or Subject to Certain Proviso?. Am liable at SSRN 2246273.
  • Rhee, R. J., 2013. The Tort Foundation of Duty of Care and Business Judgment.ltion dame law review. 88. p.1139.
  • Twomey, D., Jennings, M. and Greene, S., 2016.jAnderson's Business Law and the Legal Environment, Comprehensive Volume. Nelson Education.
  • Van Dam, C., 2013. European tort law. OUP Oxford.
  • Zillman, D. N., Simmons, J. H. and Gregory, D. D., 2015. Maine Tort Law. LexisNexis.
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