Starting a new business requires a systematic and organized approach so that all the necessary functions can be completed in effective mode. In the present report significance of terms of contracts for an entrepreneur have been described. Difference between tort and contractual liability and similarities between them is also defined. In addition to that vicarious liability of a person is also mentioned in the report.
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Entrepreneur is trying for starting a new business that is related with building contractor and Peter Abraham is aware about many things that are used while doing agreement with other parties. Peter Abraham is aware that he can be sued for damaging breach of contract but he lacks proper information about formation of contracts or the effect of terms used in agreement (McKendrick, 2014). It is assertive that essential terms of contract should be known to him. While making agreements some essential elements that are needed to be included in systematic order :-
OFFER and ACCEPTANCE :- In contract it is critical to mention offer and it is vary important element that is mentioned in the agreement. It is defined as willingness shown by a party for entering into a contract (Langfield, Liu and Ota, 2014). If offer given by a party is accepted by another than it is known as acceptance shown by a party for entering into a contract. If any party breaches terms and conditions mentioned in the agreement than offer can be revoked in such conditions. An agreement is declared valid when offer and acceptance and other essential terms are mentioned in contract. Different parties that are showing intention for entering into contract should render their valuable consideration (Chen-Wishart, 2012). Offer can be given in written format and through verbal manner. It is exchange of promise which is given in return for entering into a legal contract. The case of Payne v Cave (1789)
mentions that offer made in a contract should be clearly defined and offeror should provide proper details while mentioning terms and conditions in contract. According to the case of Gibson v MCC (1979)It has been referred that offer must be accepted by parties and when a party show willingness than it is considered as acceptance shown by a party for accepting terms and conditions that are mentioned in contract.
Intention for entering into a legal contract :- This is explains as intention or willingness shown by parties for entering into a legally binding agreement (Warren, 2014). It is also a significant element that is mentioned in the contract. If a contract is created without any intention for creating legal relation than parties included do not have any legal right to sue each another.
Capacity and Consideration :- Peter Abraham is trying for entering into a business of self contracting and it is required that he should least be aware about various significant elements of contract. Capacity is defined as ability of a person to make agreement and for that it is required that person should not be a minor (Hudson, 2012). An individual who is involved in illegal offences and facing criminal charges can also not be declared capable for making contract. Consideration is defined as act of promise which is made by parties in return for entering into a legal agreement. It has been referred from the case of Labriola V. Pollard Group, Inc. (2004) it is observed that it is assertive that all the promises made under the contract should be fulfilled by parties involved for signing an agreements.
Peter Abraham is an entrepreneur who is trying for starting a self contracting business and it is required that he should make efforts for learning essential elements of valid contract. There are situations in business when it is required to make agreements and contracts with diverse stakeholders of business (Hart and Bulloch, 2012). Suppliers, shareholders, business partners and other stakeholders gives influences on various business activities and it is critical that proper legal agreements should be signed with them.
Written contract :- Printed documents are prepared while making written contract and all the terms and conditions of agreement are mentioned in contract. If any party breaches or void terms of contracts than legal actions can be claims and obligations is enforced on all the parties that involve for signing a contract (Whish and Bailey, 2015). All the parties that are involved for making contracts properly sign on all the terms that are mentioned in the documents. It is advantageous to make contracts in legal manner and written contracts provide a effective medium for signing agreements in appropriate manner. It is easy to sue parties who involves in voiding terms and conditions of contract.
Distance selling contract :- Peter Abraham is trying to start a business of self contracting building and for gaining more revenues and profit it is required that expansion of operational activities should be done (Jones and Sufrin, 2014.). When business operations are situated in different locations than for making contracts in faster manner distance selling contracts can be signed. While signing an agreement in distance mode it is not essential that all the parties should meet face to face for signing a contract (Chen-Wishart, 2012). It is a effective method for signing contract when parties are situated at far places and use of faxes, telephones is taken for making agreements. Sometime errors are also created when contracts are signed through distance mode.
Face to face contract :- Peter Abraham has option for signing contracts through face to face medium (Cane and Atiyah, 2013). It is required that All the parties involved in making legal agreements should be present while making contracts through face to face medium. It is a effectual medium for making agreements and in face to face medium and parties can discuss all the terms and conditions of contract (Glahn and Taulbee, 2015). In this method legal evidences are not present with the parties and due to that it becomes difficult for making legal obligations on people and parties which breaches terms and conditions of contract.
Business of self contracting building is tough and complicated and it is required that Peter Abraham should be aware about different terms of contract (Pound, 2013). Diverse terms that are mentioned in the agreement with their meaning and effect are as described:-
CONDITION :- These are the terms that are mentioned while making contract and it is vital that they should be properly mentioned in the agreement. As per the case of The Mihalis Angelos  1 QB 164it has been referred that if conditions of contracts are breached than innocent party deserve the right to terminate the agreements on that grounds.
WARRANTY :- warranties can be expressed or implied terms and these are mentioned by parties when they sign an agreement. It can be concluded from the case of Schuler v Wickman Machine Tools  AC 235 that legal action can be claimed on the basis of warranties that are mentioned in the contract.
INNOMINATE TERMS :-These terms are not included in conditions and warranties and less importance is given to these terms while making contracts. If benefits mentioned under innominate terms are not given to parties than terms of contract can be ended (Werle and Jessberger, 2014). Lombard North Central v Butterworth  QB 527 is the case which concludes that failure of a party to perform his primary obligation comes under the category of breaching of contract. Claim for damages can be made if innominate terms are not fulfilled.
EXEMPTION CLAUSES :- This is explained as agreement which undertake that a party who signed contract is excluded from liability for some specific reasons (Dixon, 2013). In other words these are also known as limitation clause as it set limits on responsibility and accountabilities of parties. In the case of Glynn v Margeston (1893), it has been referred that a specific information that is printed on a paper can not limit accountability of parties to pay for damages that are caused to innocent party.
APPLYING ELEMENTS OF CONTRACT IN GIVEN BUSINESS SCENARIOS :-
CASE1 :- Referring from given case scenario it can be observed that Carol who is a student has seen an advertisements in online classified. The advertisement was about a leather couch which was kept for sale. Photo of brown leather couch was also described with the add and contact information of the owner was also given. Carol was living in a student apartment which was unfurnished and for making modifications Carol showed her wish for purchasing the couch which was kept for sell. Contact number mentioned in the advertisement were used by Carol. She sent an E-mail on the contact number and showed her willingness for purchasing the couch. It is an case of agreement where essential elements of contract are present. Advertisement which was given in newspaper was offer given for selling the couch. Carol showed acceptance for purchasing the couch by sending an E-mail to owner. It is acceptance shown by Carol for buying the couch. All the essential elements of valid contract are present in the case. Furthermore from the case of Fisher v Bell (1960) it has been referred that invitation of treat should not be considered as offer and there is wide difference between invitation to treat and offer. In the present case Carol showed intention for purchasing the brown couch that was kept for sale. Offer and acceptance and intention of offer are some essential element of contract that are present in the contract and for this reason it becomes a case of valid agreement.
CASE2 :- It has been mentioned in the case that Devi has applied for a cyber security position in a firm naming as George, Smith and Fogatry. Devi was intended to work on a cyber security position and he applied for the job position. Management of the corporation took decision for hiring Devi by getting impressed from skills and qualifications shown by him. On the other hand Preston who was father of Devi gave offer to company for giving them 150000 if the firm would hire his son. The letter sent by father of Devi was received by George and they decided to enforce it against Preston. In the present case it was illegal to give bribe and father of Devi was offering some specific amount of money to company so that they can hire their son. It is an invalid contract and offer given by father of Devi is not legal and strict punishments have been decided by state for that.
CASE 3:- As per the mentioned case scenario it has been observed that a couple booked a table in a vary popular restaurant of LONDON. They went for enjoying their food and at the entrance man has handed over his overcoat to porter. A slip was given to man by porter in which it was mentioned that restaurant will not be liable for any missing or stolen item. When the man completed his dinner when he moved for making payment for his meal than it was found be him that his wallet is missing from his overcoat. Man decided to recover all his money from restaurant but clear denial was given by restaurant and reason was given that it was clearly mentioned on the slips that management can bot be held accountable for any missing stolen. A clear notice was written on the slips given to the man that excludes the restaurant from any liability. It is clear case of exclusion clause and restaurant is moving away from their responsibility by making use of exclusion clause. It has been referred from the case of Chappleton v Barry UDC  1 KB 531 the information mentioned on the slip and on any piece of paper can not be considered a reason from moving away from liability.
CASE4 :- According to the given case scenario it has been referred that Aaron rented a house from Zephra. The house was not in good conditions and there was need to make repair in the house. Aaron spent significant amount of money for making improvements in house. Zehphra made a promise to Aaron for not making increments in the rent of house. Due to some sudden incident Zephra died and Yeti owned the property and he terminated the tenancy. Aaron in turn submitted a bill claiming for compensation for the expenses which he made in the house. Yeti is refusing to make payment for compensation and he gave the reason that there was no such agreement in which it was stated to make compensation. In the present case Aaron is not liable for compensation as there was no agreements signed between Aaron and Zehphra. It is an case of implied terms and it is assertive that Aaron should adopt legal methods for resolving the issues. It has been mentioned in the case of Shirlaw v Southern Foundries Ltd 2 KB 206, 207 that legal actions can not be claimed on the grounds of implied terms. In the present case also no legal contract was signed between Aaron and Zephra and no legal rights have been with Aaron to take legal action against Zephra.
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CASE 5 :- It has been observed from the mentioned case scenario an individual applied for motor insurance. A proposal form was given to policyholder in which it was asked that if the person was involved in any motor accident case. It was also inquired in the proposal form whether any previous claims have been made by the policyholder during the last five year. Policy holder denied for all such questions that were asked in the proposal form. In an incident his car was stolen and while investing the case it came into light that insurer was involved in making previous claims. Policy holder also argued that he is not suppose to make previous theft claims while taking new policies. In the given case situation it is legal obligation on the policyholder to disclose authentic and real information. Insurer deserve the right to void the policy from the starting date on the grounds that real informations were not disclosed by the policyholder. It has been mentioned in the case of Esso Petroleum v Mardon QB 801that if any party fails in fulfilling required obligation than on the basis of expressed terms contract can be terminated.
CASE6 :- It has been explained in the present case that an individual applied for policy insurance and while filling application form two significant questions were asked from him. It was clearly asked that whether the car has been gone for alteration from the maker's specification. The reason for asking the question was to inquire that if any optional accessories have been added in the car and parts such as spoilers, chrome ,spoilers and alloy wheel. It was also needed to be disclosed by policyholder that the person who is driving the vehicle had been involved in any accident or losses. Policy holder denied for both the questions while filling the application form. However it came into observation that car had been fitted with some motor parts and two claims have been made by insurer. By looking at seriousness of incidents policyholder decided to cancel the policy from the starting date. In the present case scenario insurer deserves the right to void the policy from the starting date as authentic information were not provided by policyholder. Policyholder argued that she assumed that all the parts of car are with original specification and she had no ideas about modifications done in the car. It was also argued by policyholder that she was also not aware about the previous claims made by her husband. The questions asked in the proposal form were vary necessary and it becomes obligations of policyholder to render proper details about questions which were asked from him. Policyholder's response is not appropriate and it becomes accountability of policyholder to do proper investigation before filling proposal form.
Tort liability is defined as accountability which is imposed when civic wrong is committed by an individual or a group of people. Innocent party who suffers harm and damages are given right to ask for compensation and take legal action against people and parties who are involved in causing harm (Vashist and Talwar, 2014). In contractual liabilities when two or more parties are involved in signing agreement than they comes under legal obligation towards each other. If any party breaches or voids conditions that are mentioned in contract than legal claims can be taken against defendant party (Liau, 2015). When any harm or injury is caused to any person due to negligence shown by another person than it comes in the category of tort liability. These liability is imposed by state and punishments are also decided by state under tort liability. Under contractual liability terms and conditions are pre decided by all the parties that are involved in signing contract. Case of Donoghue v. Stevenson refers that duty of care shown by a person comes in the category of tort negligence. Legal obligations can be imposed when an individual involves in civic wrong.
Negligence is defined as void and breach of conditions that are mentioned in contract due to which harm is faced by innocent party (Public acts, 2016). Negligence shows lack of care due to which plaintiff suffer injuries and harm and it becomes responsibility of dependent to pay compensation for damages caused due to negligence shown by a party (Gruneberg, 2013). There are some rules and regulations which are framed by state that are mandatory to follow for all the individuals that are involved for signing a contract. Criminal negligence are caused when an individual is charged for cases that are associated with crime that are made with the person (Yu, 2014). It is required that proper evidences should be given while proving criminal offences against a party. Under Tort negligence liability is imposed on a person when some civic wrong is committed by an individual. As per the case of Blake v Galloway  CAIt has been referred that negligence and lack of care shown by a party comes in the category of negligence and tort liability can be imposed on a person.
Vicarious liability is explained as situation under which a person is held accountable for mistakes committed by some other individual. In context of business organization when employee of company is involved in any misconduct and wrongdoing than it becomes liability for employer to pay for the damages and harm that are caused due to mistakes committed by the staff member. Employer of the firm are superiors and if any mistake is committed by any subordinates than it becomes accountability of business to pay for damages that are caused due to wrongdoing of their staff members (Liau, 2015). However it becomes duty of employer for providing better employment conditions to their workers. If while performing the task if any injury is caused to a staff member than it becomes responsibility of employer to pay for the damages that are caused to the employees. It comes under the vicarious liability of the employer. As per the case of Dubai Aluminium Co Ltd v Salaam it becomes liability of employer to pay for the damages that has been caused due to mistakes of their employees. Moreover it is also responsibility of employer to render better employment opportunity to their staff members. Vicarious liability imposes legal obligations on employer of the company and duties are also imposed on them.
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CASE 7 :-
In the given case situation there are two situations which are as described :-
(a)Hospital can be held for negligence :- Mr. brown was not feeling well and so he went to hospital for taking medical assistance. Hospital can not be held for negligence if staff members would treat the patients in proper way. Mr. brown was complaining of chest pain and he was also facing breathing problem. Doctor who rendered medical assistance to patient not did any medical examination of patient and prescribed medicines over phone and nurse gave counter pain killer to Mr. brown. As a result of negligence shown by staff members of the organization patient suffered due to serious health issues and he died. In this case hospital became accountable to pay compensation for the health issues suffered by patients due to negligence shown by staff members. As per the case of Haynes v Harwood  1 KB 146, CA it has been concluded that employer of the company can be held accountable for negligence shown by staff member while performing their task.
(b) Hospital can not be held for negligence :- If medical professional including Doctors and nurse would have given proper medical treatment to patient than in such situation hospital can not be made liable for paying compensation to widower of Mr. Brown.
CASE 8 :- According to the given case scenario Driver of a chauffeur company was over drunk and due to that a serious incident happened in which clients suffered serious injuries. When investigation were carried out to it was found that driver was over the drinking limit. In the present case scenario driver of the Chauffeur company shown some negligence due to which the accident happened. It is the wrongdoing and negligence caused by employee of chauffeur company due to which this accident happened. In the present case liability goes towards chauffeur company to give compensation to clients for negligence shown by their employee. According to the case of Dubai Aluminium Co Ltd v Salaam wrong doing committed by any staff member becomes accountability of company to pay for damages. If any harm to any client has been made than employer of the organization is held responsible for mistakes committed by their employees.
CASE 9 :-
As per the present case Mr Jones was working as delivery driver for super market firm and while performing his work he suffered from some injuries. He was advised to go for surgery and month of rehabilitation with a physiotherapist. Colleagues of Mr jones are now suing supermarket firm for the damages and harm caused to the employee of super market firm. Management of the corporation denied for paying any compensation and it was argued that at the time of accident responsibilities for health and safety were delegated to some other companies. In the present case staff member of supermarket faced some injuries and harm and due to that he went for surgery. In the present case it becomes liability of super market firm to pay compensations for the damages and injuries sustained by their employee Mr. jones. As per the case of Valles v. Albert Einstein Medical Center, 758 A.2d 1238 it has been observed that employer of the organization can be held liable for injuries and harms caused to staff member of the firm.
Present report concludes that it is assertive that contracts should be signed in legal and unlawful manner. Entrepreneur can make agreements by face to face methods, distance selling mode and by written method. Offer, acceptance, intention to treat and capacity, consideration are some significant elements that are needed to be included while making agreements with other parties. When any civic wrong is committed by a person than it becomes liability to pay for compensation to innocent party to whom damages have been caused. If any party breaches terms and conditions of contract than legal obligations can be imposed on defendant party. Moreover under vicarious liability employer of the company is accountable for mistakes and wrongdoing committed by their staff members. Moreover if any damages and injuries are caused to staff members while performing their duty than under vicarious liability employer of the firm can be held accountable for it.
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Books and Journals
- Cane, P. and Atiyah, P.S., 2013.Atiyah's Accidents, compensation and the law.Cambridge University Press.
- Chen-Wishart, M., 2012.Contract law.Oxford University Press.
- Chen-Wishart, M., 2012.Contract law.Oxford University Press.
- Dixon, M., 2013.Textbook on international law.Oxford University Press.
- Gruneberg, S., 2013. Construction Contract Preparation and Management From Concept to Completion.Construction ManagementandEconomics.31(12). pp.1217-1219.
- Hart, H.L.A. and Bulloch, PA., 2012.The concept of law.Oxford University Press.
- Hudson, A., 2012.The law on financial derivatives.Sweet & Maxwell.
- Jones, A. and Sufrin, B., 2014.EU competition law: text, cases,andmaterials.Oxford University Press (UK).
- Langfield, S., Liu, Z. and Ota, T., 2014. Mapping the UK interbank system.Journal of Banking &Finance.45. pp.288-303.
- Liau, T., 2015. Accessory liability [Book Review].Singapore Journal of Legal Studies,(Jul 2015), p.278.
- Liau, T., 2015. Accessory Liability by Paul S. Davies.Sing. J. Legal Stud.,p.278.
- McKendrick, E., 2014.Contract law: text, cases, and materials.Oxford University Press (UK).