Table of content:
1.1 The importance of the essential elements required for the formation of a valid contract-explain (P1.1) A contract will be enforceable if it can satisfy some basic conditions. These type conditions are known as elements of essential for a valid contract. Every legal contract satisfies these conditions. Without satisfying these conditions a contract can’t be acceptable. That’s why for the formation of a legal contract satisfying the essential elements is very important. The importance of the essential elements to be a good agreement is described below: Offer and acceptance: Basically offer is a proposal. When the proposal is accepted by the person to whom the proposal is made, then it turns into a contract. To be a contract, one party one party should offer and other party should accept. Where there is no acceptance, there is no contract. For example, Mr S offers to trade his car to Mr Y in exchange of £45000. This is called proposal. If Mr Y accepts the offer, then there is a contract.
Intention to create legal obligation: There should be an intention to create a legal obligation between the parties. For example, a contract to visits a friend’s house is not a contract proposed to generate legal bond, so it is not a contract. But a contract to buy a car is a valid contract because there is purpose to generate legal obligation. Lawful Consideration: Consideration can be defined as a promise to do something or not to do something. A contract of doing something for nothing can’t be an official agreement. Free consent: An important issue to exit a valid contract is free consent. Free consent should have in both parties.
A contract made by coercion, mistakes, undue influence and fraud will be void. Certainty: An agreement should not be vague. It should be clear to all related parties. Registration & Writing: A good contract should be in written form. Another important element of a valid contract is registration. Capacity of Parties: The parties of a contract should be officially capable of ingoing into a contract. A minor does not possess the capacity of entering into a contract Performance Possibility: An agreement should not be incapable of being performed. A treaty to do an unworkable thing can’t be a treaty. Legality of the object: The object of agreement must be legal. A contract can’t be signed for illegal, immoral issues. After all, it is learned that, to form a good treaty all the elements mentioned above must be present otherwise it can’t be a good contract. So these elements are very important for making a valid contract. Ref. Anson, Law of a contract
At the given scenario, identify the essential elements of the contract (M1) The essential elements of the contract that are identified in the specified scenario are given below: Offer and Acceptance: In the given scenario, Mr John McGurk (seller) proposes to sell a car in exchange of £60,000. The proposal was made to Collin McCelland. After getting a telex of the offer, Collin McCelland agreed to buy the car and send acceptance latter to John McGurk. So here John McGurk is offeror and Collin McCelland is offeree. Consideration: There is a consideration of selling the car.
The car will be sold if buyer agrees to pay £60000. Legality of the object: The object of this contract is a car which is legal in the eye of law. Free Consent: There is no undue influence, coerce or fraud to accept the offer. So this contract also satisfies the requirement of free consent. Intention to create legal obligation: Here both parties have the intention to create legal obligation. Findings: The given contract has applied most of the essential elements. 1.2 Discuss the impact of different types of contract (P1.2) An agreement is known as officially binding contract.
A contract is one type lawful business deal. For example as, contracts of insurance, contracts of securities, contracts to sale land, product etc. Three types of contract like mixture, verbal and written are described below. Every contract has separate impact: The Written contract: A contract which is made on printed document and signed by all the related parties is called written contract. It is the best of all the contracts The Mixture contract: A contract which is combination of both written and verbal is called mixture contract. In this type of contract, some criteria of written agreement and some criteria of verbal agreement are present.
The Verbal contract: An agreement which has no written document is called a verbal contract. No legal documents are kept for this type of contracts. Every type of contract has some impacts. In this section, I have mentioned some impacts of a written contract: Not difficult to keep in mind
Not difficult to recognise Can be proved easily Can be used as future evidence Reduces confusion and error
The impacts of a Verbal contract are described below:
It can’t be proved easily Difficult to keep in mind Increase the possibility of confusion and error Mixture: In this type of contract, there are also some possibility of confusion and error. So a written agreement is the best of all agreements. After all I can say that, since written agreement possesses some especial criteria, everybody should use this form of contract. 1.3 With reference to their meaning and effect, analyse the terms in contracts (P1.3) Three type of contractual terms are condition, innominate term and and warranty. Basically contractual terms are two types such as warranty and condition. Condition: An event, action or obligation that must be satisfied or done before another proposition is satisfied. It is one of the major terms of the contract and it is also called a prime term. When this term is violated the guiltless party can stop the contract and demand damages. Reference from a case:
Mr P made an agreement with a songster for five programmes. But the songster cannot perform the first program because of his illness. So Mr P breaks the contract and hires another songster Supposed:
The songster violates the condition of the contract, so Mr P can dismiss the treaty. Here the songster could not perform in the initial night which was most important to attract visitors. So this contract will be ended. Warranty: This is a warranty which is an assurance given to one party by another party in business and legal transactions. Warranties are not negligible provisions of a treaty. When one party breaks the warranty, the other party can demand compensation. Normally seller provides a warranty paper to the buyer writing all the terms. The buyer gets compensation if there is any wrong in the product within the specific time. Reference from a Case:
Mr Nelson decided by an agreement to replace the computer if it damages within 1 year. After 4 months, the computer’s operating systems failed and when Gye claimed a new one with the warrantee paper, Mr Nelson replaced the damaged computer with a new one. Supposed:
Mr Nelson violated the warranty but the company could not dismiss the contract. Innominate term: A concept of Innominate term was first recognized in a shipping company. It justifies the level of loss of the blameless party. Reference from case:
A boat was started for 10 months period. There was an expression that the ship will be sea time during the total time. The problems arise when there were some troubles in the engine and the engine crew were unable to solve the problem. As a result, the boat cannot run for 15 days. The party who hired the boat considered it as a break of condition and dismissed the agreement. On the other hands, the owners of the boat said that, it is not a break of condition. They filed a case for unfair refutation. Supposed:
When the owner filed a case in the courtyard, then the court collected information on that matter. After collecting and analysing the information, the court defines it as a innominate term and justifies effect of the agreement and whether the end of the agreement significantly deprived the innocent party of total gain. Then the court considers that 15 days out of 10 months contract is very small time period so it can’t deprive the defendants of the total gain so they can’t end the agreement. Choose suitable terms for the specified circumstances (M2) The following terms can be found in the scenario.
1. The Warranty 2. The Conditions 3. The Innominate terms. Condition: In this scenario condition can be different types like providing the car which actually mentioned in the contract. If John McGurk does not send the proposed car, Collin McCelland will breach the contract. Warranty: John McGurk can provide a warranty paper stating the period of warranty covers, the condition for which the car will be replaced or provide free services. If the car faces any troubles within warranty period, John McGurk is bound to replace the car or provide free service. Innominate terms approach: In this case, an innominate term may be the percentage of cash refund for any technical fault of the car, the percentage of expenses which must be carried by the purchaser or the process of claiming damages.
2.1 In the specified business scenario, apply the components of an agreement (P2.1) The basic essentials of contracts that are applied and observed are described below: Offer and Acceptance: In the particular case, John McGurk propose to Collin McCelland to sell an exceptional car for £60,000. Getting a telex of the offer, Collin McCelland agreed to buy the car and send acceptance latter to John McGurk. So here John McGurk is offeror and Collin McCelland is offeree.
Consideration: There is a consideration of selling the car in exchange of £60000. Legality of the object: The object of this contract is a car which is legal in the eye of law. Free Consent: There is no undue influence, coerce or fraud to accept the offer. So this contract also satisfies the requirement of free consent. Intention to create legal obligation: Here both parties have the intention to create legal obligation. The Conclusion: So in the given contract most of the essential elements are applied. That’s why we can say that it is a valid contract. 2.2 Apply the provisions of different types of contracts (P2.2) Provisions can be categorised into two types. One is Express terms and another one is implied terms. Again on the base of contracts terms are of four types. In the following section I have briefly described the application of law on terns in different contracts: Financial contracts,
General contracts, Property contracts, Latin contracts, In case of a general contract, one party offers to another one. If the other party accepts, a contract is made. In such type of contract if one party break the condition then the contract will be void. Here some terms are expressed and some are implied. In case of a financial contract, the basic terms are debenture, floating charge, a guaranty, indemnity, insolvency and liquidation etc. In the property contract law of four terms are described:
Evenhandedness – The economic significance of property. Lease – The owner of property transfers the right to use for a defined rent for specific time. After the time, the assets need to be returned. Legal duty –This is the responsibility of acting in accordance with law. A loss of use – If property can’t be used and possessed in defined method, there will be loss of use. In case of Latin contracts the most important terms are applied that bona fide -in good faith, bona vacantia-in vacant property and caveat emptor buyer beware, Prima facie – at first sight, etc. 2.3 Assess the effect of different terms in specified contracts (P2.3) There are three significant essentials which have highly crash on an official contract in any business organisation. Those are warranty, innominate, condition. It is not possible to build a good contract without these valuable elements. Condition: It is the condition which is the best elements of a good agreement.
Condition is an inseparable part of contract. In the given scenario the both parties will sign a contract paper stating all the relevant condition. No party can breach the condition. If condition is breached, agreement will be cancelled. Warranty: The warranty is a minor component in the treaty. It’s very important in the business. Everyone desires warranty. In this case, for example, the vendor (John McGurk) gives the customer (Collin McCelland) 2 years warranty. Suppose the car is found with some problems after two month of purchasing. In this situation, the vendor is bound to substitute the car or provide free service. Innominate: Innominate is also an essential element in a contract. It can be condition or Warranty.
In this scenario if any circumstances fall in condition, then the law of condition will be applied otherwise the law of warranty should be considered. 3.1 Contrast the legal responsibility in tort with the contractual legal responsibility (P3.1) The responsibility in tort VS the contractual legal responsibility The following discussions contrast between the responsibility in tort and the contractual responsibility; Responsibility in tort: Tort liability can be defined as providing compensation to the person who has become loser by the act of others. There is no freedom.
The applicant gets only indemnity in case of tort charge, Comparatively less privacy is maintained, Tort liability creates when agreement is breached. Contractual responsibility: A contractual responsibility is formed when related parties assure certain things to one another. A person may be busy in washing a room for money. If any party breaks the condition legal remedies need to be provided to the innocent party. There is more freedom
In case of contractual liability, the claimer gets both compensation and salary. In case of contractual responsibility, more privacy is maintained. For instant: In case of contractual liability, if an employee cannot report to work, he deserves both salary and compensation. But if tort liability were existed, then the worker would get only compensation, he will not get any wages It is contractual responsibility which can be many kinds. But on the whole, it is liable for damages that are assured in the contract. 3.2 Describe the characteristics of liability in negligence (P3.2) The model of negligence is the way to hold a person responsible if he can’t be able to make proper decisions, even if he didn’t want to cause harm. In business organization, several kinds of negligence are occurring. Here I will mention some from those: Duty of care: Duty of care is the common negligence in business firm. Many business firms face serious problems due to proper duty of care.
So to avoid the problems, company should apply the concept of duty of care Breach of duty: It is the break of a treaty by any one or both parties. The breach of contract creates a lot of problems. Personal injuries: It is also connected with responsibility in negligence. All employees should be more cautious for physical accident. They have to operate the machinery carefully to safe themselves. Damage to property: Negligence can cause the damage of valuable property. So every business activity should be performed with proper care. Economic loss: Economic loss refers to the failure of getting financial benefit. Economic growth may be hampered without proper awareness.
So we see that negligence is the reason of so many problems of any business organization. It can harm the management as well as employees which is not expected. Only proper awareness can solve these types of problem. So management should be careful about that.
3.3 How a business can be vicariously liable-Explain (P3.3) Vicarious liability: It states that if any worker of a firm has any difficulty because of illegal action of the firm, then the firm is ethically liable for that. The corporation needs to provide compensation to the workers from the company’s welfare fund. The following examples explain the vicarious liability of the corporation: In the last year, at the time of working, many workers lost their lives because there was a terrorist attack. So their family falls in danger to lead their lives. In that situation, the owner of that garments has taken the responsibility of the worker’s family.
The company provided their family cash money as compensation. So this situation is referred as the vicarious liability of a business firm. 1. Drinking too much from a bar Mr Tiago crashed car causing brain damages. In this case the bar will not take the responsibility because it was Mr Tiago’s own fault. But if Mr Tiago were minor then the bar must take the responsibility because selling these types of product to minor is strictly prohibited. Mention and communicate your findings in P3.3 (merit 3)
In recent years, many companies provide training to their employees, arrange different seminars to make aware to their employees. The company ensures a safe working condition for their employees. Many large companies perform corporate social responsibility. Most of the firms form ‘worker welfare fund’.
In many factories there is ‘child rearing home’ for children of female workers. Almost all of the companies provide medical facility to their workers. They provide transportation facility to their employees
To create social awareness and make social development lots of firms invest. If any accident occurs, company provides compensation to them or their family. So we can say that now a day’s companies operate business not only for making profit, but also for the benefit and development of the employee and society. 4.1 In different business situations, apply the elements of the tort of negligence and defences. (P4.1) A tort is called the civil mistakes for which compensation is given to the wronged. Negligence is one kind of tort which includes a lot of situations where persons negligently hurt to others. There are some elements of the tort of negligence. In the following section, some of the elements of tort of negligence and defenses are applied; Personal injuries: The main subjects of tort of negligence are personal injuries. If any employee becomes injured due to his/her carelessness company will not take the responsibility.
Property Damages: Any time property can be damaged due to inattention. Since an employee cannot regain his/her personal property, he can demand compensation from the employer. Economic loss: It means the reduction of firm value. If any economic loss occurs by other negligence, then the wronged party bound to give compensation. Economic issues are the basic things in the business. 4.2 in given business situation, apply the elements of vicarious liability (P4.2) Actually the given scenario is very short; there is no so much information. So assuming some situations I can find the elements of vicarious liability and I have applied the of vicarious liability’s components in the given business scenario: The main components of vicarious liability are the relationship between the parties; here a contractual relation between John McGurk and Collin McCelland exists. In this case if Collin McCellend faces any problem or accident due to the technical fault of that car; John McGurk must take the responsibility but if it occurs due to the buyer own fault then seller will not be liable.
Another important element is that the occurrence should be happened during the warranty period. So after the warranty period seller would not take the responsibility. Evaluate and justify overall valid conclusion- use critical reflection to (D1) After all, we can say that, a contract will be valid if it satisfies the essential element of a valid contract. Here I have tried to focus some elements of contract, such as offer, acceptance, consideration, certainty and legality of the object, etc. In this assignment I have mentioned and described the terms of a valid contract.
The major terms of a contracts are condition, warranty and innominate. If condition is breached the contract is ended but if warranty is breached the contract can’t be ended. Only the innocent party can demand damages. Here I also tried to compare and contrast between liability in tort and contractual liability. Focus is also given on the classification of contract such as written contract, verbal contract and mixed contract. A written contract is preferred due to some valid reason like it can be used as a future reference to reduce misunderstanding. After all, the rules of contract should be applied to be a valid contract.
Econ 201 Macroeconomic
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