Unit 5 Aspects of Contract and Negligence in Business


Law is the structure which developed along with various rules and regulation regarding to the commercial transaction and operations. In other word it can be said that it refers to any rules that if broken subjects a party to criminal punishments or civil liability (Chen-Wishart, 2012). Laws in the United states are made by federal, state and local legislatures, judges, the president, state governors and administration agencies. In the reference of business law, a contract is an agreement between two or more than two parties by which rights are acquired by one or more to acts of impatience on the parts of other. The agreement between tow or more than two parties are completely enforceable by law. In this project report, the importance of legal agreements and value has been addressed. In addition to this essential elements required to formation of a contract in the UK and its importance has been also discussed in this report. The major objective of this report is to understand the legal aspects of business and effects of law on the business operations and activities.

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Task 1


According to the given case scenario, James offers to Martin for buy his shop in 160000 but Martin wrote a James offering his for 120000.James replied to Martin by return of post and saying that he would only accept a minimum of 140000.After few time, James sent a letter to Martin and there was no reply from Martin saying that he would accept 120000.AS pew this case scenario, there has case of mutual consent, proper offer and acceptance, intension to create legal relationship etc. There has used various elements of valid contract. These essential elements are as follows-

  • Proper offer and proper acceptance-Offer is a proposal which express the term and conditions of contract clearly and specifically for the parties. On the other hand acceptance may be oral or written but must involve the original terms of the contract. In order to form a valid contract an offer must be made between the contracting parties. Offer is being followed by an acceptance of other parties of contract and thus will lead to a formation of a valid contract (Appleman, Appleman and Holmes, 2013). The person who develop offer is known as offerer and the person to whome the offer is being made is called offeree. The offer should be accepted unconditionally that is if any additional conditions are imposed by the offeree subsequently to offer than it would constitute counter offer being made.
  • Intension to create a legal relationship- As per this state, there must an intention behind the contract between two or more then two parties. While entering into contract major requirement is the intention of contracting parties. It means the contractual obligation of then parties must not have involve any outside pressures or influence. If in the contract, if there is no such intension on the part of parties, thee is no contract.
  • Capacity-It refers to an ability of both parties to enter into contract. In other word it is an ability to implies the legal rights assigned to the parties to form the valid contract. Becuase no contract can made by the lunatic weatherperson party who offer and the party who accept must capable and able to develop an contract (Chen-Wishart, 2012).
  • Consideration- In the contract there must have some consideration. It means contract should always be measurable ion economic term that is could be money and goods. But the contract can not be measure in terms of promises and gifts, this types of contract can not be enforceable by law.

An invitation to treat

An invitation to treat is merely an announcement to other that a person is prepared to entertain an offer for a certain thing or services. In other word it can be said that An invitation to tereat must be offered by one of the parties entering into the contract, and it must be accepted by all parties before it can be included in the contract.


An agreement which is enforceable by law. As per the business law, all contracts are agreements but all agreements are not contract. A contract is a legal document under which includes legal obligation for achieving the objective of contract. As per the legal aspect, there are various types of contract which have their own criteria and objective to create contract between parties. These contract are as follows-

  • Unilateral and bilateral contract-The exchange of mutual, reciprocal promises between entities that entails the performance of an act, or forbearance from the performance of an act, with respect to each party is a bilateral contract. This types of contract is also known as the two sided contract because of the two promise that constitutes it. The promise that one party makes constitutes sufficient consideration for the promise made by the other. For example When order food at restaurant, receive treatment from doctor, receive services from beauticians (DeMitchell, 2006). On the other hand Unilateral contract involves a promise that is made by only one party. The offerer promises to do a certain thing if the offerer performs a requested act that he or she knows is the basis of a legally enforceable contract.
  • Written and verbal contract-Written contract is a contract under which term as conditions are in written form and which recorded in writing for further reference and considerations. This contract is most safe and secure form because under this not only has promise is made but also serve as a proof that the promise is made between the parties. There must include both parties signature on the contract document or paper. On the other hand verbal contract is a express by spoken words between parties (Faure, 2009). Both parties can engages with each other by use of spoken words. They believed on verbal terms and condition of contract.
  • Valid, void and voidable contract- A void contract imposes no legal rights or obligations upon the parties and is not enforceable by a court. On the other hand , a voidable contract is a legally enforceable agreement, but it may be treated as never having been binding on a party who was suffering from some legal disability or who was a victim of fraud at the time of its execution (Nystén-Haarala, Lee and Lehto, 2010). Further, a contract which is framed in compliance with the legal enactment prevailing would form a valid contract.


As per the given case, James offer to sell his shop so he is offerer and the Martin is offeree. So it can be said that it is an element of offer and acceptance. James have capacity to develop a contract because he have shop which he want to sell. James have intension to sell his shop by the prices of 160000 and Martin wants to buy this shop in minimum prices. So it can be said that there must have intension to purchase or sales of shop. The conversation between James and Martin are in the written form. On the another case scenario, The conversation between James and Ben also by written form so it can be said that there was written contract between them.


Promissory estoppal is a legal principle that a promise is enforceable by law, even if made without formal consideration, when a promiser has made a promise to a promise who then relies on that promise to his subsequent detriment (Giliker, 2010). Promissory estoppal is intended to stop the promiser from arguing that an underlying promise that was made should be not legally upheld or enforced. In other word it can be said that in the law of contracts, the doctrine that provides that if party changes his or her position subsequently either but acting or forbearing from acting.

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Task 2


Parties to a contract are bound only by its terms, not by other statement made in pre contract talk. Terms of contract are condition agreed by all parties to the parties to the contract and which forms the basis of the formation of contract (DeMitchell, 2006). In other word it can be said that terms are refers as the set of rules and regulation charged on the contract by the legal bodies, government or any other authorities which impact their overall contracting cycle and structuring. This terms of contract assis to parties in maintaining the interest and consent of both the parties and helps in avoiding the situation of negligences, fraud and illegal activities. There are various contracting terms that used in the contract. Following are some terms-

  • Express term- This terms are expressed by the written and oral words between the parties. This type of term can be implemented between the parties by discussion and mutual consent. In addition to this expressed types of term carries the entire information about condition and warranty of contract.
  • Implied terms- This kind of contract between the parties are present in the written agreements and its is bound to follow the rules and regulation specified and determined by the third party who are not a member of the contract.
  • Condition-Condition term are always consider at the time of contract made and it is determined by statute (Kidner, 2008). If a party breaks the rules and regulation or if person does not fulfil his condition then aggrieved party can sue for damages and the contract can be determined at its option.


Scenario 3

According to the given case scenario, Susan entered into a contract to perform as an opera singer for 3 month for the royal opera house. She became ill five days before the opening night and was not able to perform for the night. Cited company has replaced Susan. Therefore, Susan sued the royal opera house company for breach of contract.

As per the breach of contract, Susan can Sue to royal opera house by use of implied contract. As per this contract, Susan has entered into contract. Susan have right to sue against the company because as per the implied contract, implies terms are those which are not expressed by words and written contract but re reflected as the ultimate promises (Lando and Beale, 2000). So it can be said that however royal company and Susan has not bounded by the written contract but there was a course of dealing, good faith, fact, applicable law or custom prevailing.

In the second case scenario, Susan can sue against the another company because she missed 6 day of rehearsals. In the second case, Susan agreed by contract to perform as an opera singer but again she was unable to perform. In such case Susan can sue to another company by use of expressed term (Nystén-Haarala, Lee and Lehto, 2010). As per this term of contract, the term may be written or verbal which create an effective impact on the development of the contract. Further the expressed terms of the contract consist of the condition, warranty and in nominate terms. In the such case it can be said that Susan and anaother company has agreed upon the contract.


Scenario 4

According to the given case, Scmmell and Ouston was entered an agreement so it can be said that it is an expressed contract. As per this express contract , both parties has engaged into the either written and oral words. Scammell were to supply a van for 286 on hire purchase terms over 2 year and Ouston was to trade in his old van 100.

On the basis of second case scenario,there has an implied term of contract because claimant has a tenancy on the defendant's field. Before the field was due to be harvested the tenancy was terminated and claimant submitted the bill for cost of seed spent in the field. But defendant's refused to pay stating there was nothing in tenancy agreement (Nystén-Haarala, Lee and Lehto, 2010). In such case, as per the implied agreement, Claimant can claim against the defendant in order to recover its money which spent oin seeeds in the field.


As per the legal term, negligence is a failure to exercise the care that a reasonably prudent person would exercise in like circumstances. The area of tort law known as negligence involves harm caused by carelessness, not intentional harm (Rush and Ottley, 2010). As per the given case scenario,Andy can not claim for the damages to against the bike shop because staff and assistant of this shop displayed that all goods accepted only subject to the term and conditions displayed (Ramanathan, 2014). All care but no responsibility taken for goods left for repair or services or for any loss or damage howsoever caused.


An exclusion clause is a term in a contract that seeks to restrict the rights of the parties to the contract. A clause may be inserted into a contract which aim to exclude or limit one party;s liability for breach of contract or negligence.

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Task 3


In the situation where a person is harmed by the unknowing action of some other, empowers the victim with the legal rights to take lawful actions against the suspect. As per the given case, john was continuous in overdraft and had been in serious debt with various banks on and off for several year (Rush and Ottley, 2010). In such case the cat of carelessness can be applied because John has neg late his bad debt from landlord. Various elements of negligence are as follows-

  • Duty of care-If the person causes harm or damage by the cat of negligence. The suspect is generally found incapable of addressing the basis duty of care then it allows the victim to take legal actions on the ground of negligence (Slapper, Kelly, 2011). David can recover his losses from this element.
  • Remote of damage-if person of the claims is able to show they have caused a physical or financial form of loss from the negligence of the nominal party or defendant than they are expected to increase reimbursement. David can recover damages by use of this element/.


The contract obligation can developed when person within contracting parties is unable to perform his roles and responsibility (Lawful consideration.2011).

Tort liability developed when a person in the contracting parties is unable to perform his assigned assignment as per the standard of duty.

In contract, legal cation and punishment is limited.

Lawful cation is depends on the crime and losses caused to the other parties.



Donoghue V Stevenson was a foundational decision in Scots delict law and English tort law by the house of lords. It is created the modern concepts of negligence, by setting out general principle whereby one person would owe a duty of care to another person (Sutton, 2010). Also known as the paisley snail or snail in the bottle case the fact involved Mrs Donoghue drinking a bottle of ginger beer in a cafe in paisley Renfrewshire. A dead snail was in the bottle. She fell ill and sued the ginger beer manufacturer, who is Mr Stevenson. As per the duty of care element in negligence, Donoghue can sue on the Stevenson.


Rylands V Fletcher was a decision by the house of lords which established a new area of English tort law. Fletcher employed contractor to build a reservoir playing no active role in its construction. When the contractor discovered a series of old coal shafts improperly filled with waste they chose to continue work rather than properly blocking then up (McKendrick, 2014). Strict liability of tort applies when a defendant places another person in danger, even in the absence of negligence, simply because he is in possession of a dangerous product, animal or weapon.

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Task 4


As per the given case scenario, John hired a boy of 14 year teenager as he has not supposed to hire him but ABC dairies hold the teenager. He worked directly to bill. Abc dairies become aware of this arrangement but had not done anything about it (Murfin, 2012). As result Bill's careless driving,,the boy was injured. As per this case ABC company is responsible for the wrong committed by its employees. In such case, ABC should care about this illegal action done by John but t was not so company is liable to pay for boy damages and remedies.


The act of Vicarious liability is a type of responsibility for overcoming the damages caused to a party by the negligence actions or functions of other party. In other word it can be said that vicarious liability is a part of action which is oriented by one person but the results are in forms of negligence for other individual (Oya,2012). The cat of negligence of employee may make the employer responsible for the same. Various principles of vicarious liability are as follows-

  • Each and every activities and action of personnels should be control and manage by the employer, thus organisation is responsible for any illegal and unlawful activities of employees.
  • Tenure of employment is equally applicable for all personnels who are working in the organisation.

As per the given case scenario, ABC company is liable to pay the remedies and damages to the teenage boy.


Occupier's liability is a field of tort law, codified in statue, which concern the duty of care owned by those who occupy real property, through ownership or lease, to people who visit or trespass. It deals with liability that may arise from accidents caused by the defective or dangerous of the premises (Rush and Ottley, 2010).


From this project report it has been ascertained that element of contract and terms of contract successful define the area of legal framework in the company. Various cases assist I n evaluating the legal implication of theoretical law. Therefore this project has been developed an appropriate means of applicability of contract and increase the knowledge.

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