Aspects of Contract and Negligence for Business

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Requirements for the formation of a valid contract

A contract can be defined as a lawfully binding agreement between two parties. It has consequences on either party. Therefore, as discussed below, a contract has to contain some basic elements that should be used to define it.

An Offer

There should be an offer by the first party to invite the second party into the contract for negotiations purposes. An ascent to the same by the second party will lead to the contract coming into being and becoming legally binding. An offer can be described as an expression of willingness to contract on certain terms (Jalil 2011, p. 110).

The offer is usually made to the second party with an intention that it will become binding when accepted. When an offer is declined, it extinguishes the idea of the probable contract. Therefore, one cannot be held to account for it.

Acceptance

The second element of a contract that is very important is the acceptance bit, which should be done within the terms of the contract. A party to the contract will be assumed to have understood the terms of the contract when he or she enters agreement consent to the same (Jalil 2011, p. 110).

One is legally bound by a contract once he or she accepts it. He or she has the duty to make sure that he or she understands the terms of the contract before accepting it. Breach of contract after acceptance might lead to legal consequences.

Legal purpose/ Objective

There must be an intention for the two parties to create a legal relationship between them with the contract. An absence of legal intent will render the contract null and void because social agreements between parties or agreements of a domestic nature are not regarded as legally binding because they do not contemplate legal relations (Jalil 2011, p. 111) as in the case of Balfour vs. Balfour (1919).

Mutuality of Obligation

Mutuality of obligation can be described in other words as the meeting of minds. In fact, “parties in the contract must agree to the same thing in terms of the drawn contract, and at the same time” (Jalil 2011, p. 111). Mutuality of obligation can only be achieved when the contract is still on offer. Once the offer has been withdrawn, it cannot happen.

Lawful Consideration

Lawful consideration is an element of the contract that represents either a benefit to the promisor or detriment to the promise (Jalil 2011, p. 112). It denotes the price offered in exchange for a promise, otherwise known as quid pro-quo.

Competent Parties

A contract can only be made between two legally competent parties (Jalil 2011, p. 112). Therefore, a contract can only be made between people of legal age and sound mind.

How the law approach the issues of consideration, intention to create legal relations, and the capacity to contract

According to the law, a contract becomes legally binding once the promisee accepts and signs it. The promisee is believed to have read the details of the contract, or is supposed to have read the details of the contract before appending a signature on the same (Jalil 2011, p. 110). In the above scenario, Al has advertised the goods he has on offer to potential buyers thus inviting them to contract.

A negotiation occurs between the Al and Bash cars where an agreement is reached through the mode of communication adopted by the two. In this case, an agreement was ostensibly reached when Bash cars wrote back to Al to accept the offer thus providing a green light for Al to deliver the goods, which he did as per the contract.

According to the law, several reasons can lead to a contract being voidable, with no party bearing liability. According to Jalil (2011), under the issue of consideration in a contract, there is either a benefit to the party offering the contract or detriment to the second party concerning the contract (p. 115). In the above case, Al has done his duty to communicate to Bash cars about the final price he is offering.

It is the duty of Bash cars to read the communication properly before accenting to it. Therefore, the mistake not to read the reply letter properly from Al is placed on Bash cars because their own negligence made them fail to see the price in the letter. The assumption that the price is 45 pounds is solely made by Bash cars and that they have no reason to back up their assumption.

According to the contract law, an objective inference should be made when coming up with a contract in that, when a third party looks at the same contract, they should come up with a conclusion that the contract is meant to achieve (Jalil 2011, p. 113). The mistake in this case is unilateral. It cannot render the contract void.

Therefore, Bash cars plc should be responsible for the fault and that it should bear the consequences as in the case of Storer v Manchester City Council (1974). The law provides for an intention to create legal relations by setting up conditions for the same. The two parties must be ready to enter a legally binding contract for it to become legal.

The key problems associated with exclusion clauses and their incorporation into a contract

Exclusion clauses in contracts are usually meant to exclude a certain party to the contract from certain events that might happen within the execution of the contract, which the party might be held liable for them in normal circumstances (Maharaj 2012, p. 636). Exclusion clauses are usually made by parties contracted to carry out certain services on behalf of clients.

Such services usually have certain risks. It is therefore meant to protect the contractor from carrying the costs that might arise from the risk. Exclusion contracts are governed by the Unfair Contract Terms Act of 1977 and the Unfair Terms in Consumer Contracts Regulations Act of 1999 (Jalil 2011, p. 119). Exclusion clauses become valid as long as they meet several conditions.

Firstly, they must have been properly included in the contract and that they do not contravene any law. Some key problems associated with exclusion clauses are evident. For instance, some exclusion clauses are vague. In many instances, exclusion clauses have been vaguely worded in that the reader of the clause might not tell exactly what the scope of the clause is all about.

This step is usually accomplished by the drafter of the clause as a way of giving it a wide range in the case of liabilities (Maharaj 2011, p. 636). On the other hand, it confuses the client because he or she will not be in a good position to tell what liabilities the contractor should carry and/or what the client should carry. Invisibility of the clause is yet another problem.

Many exclusion clauses are not directly visible to the client taking the service. They are usually not noticeable in the wording of the contract. They can appear at the bottom of the contract, written in very small fonts, or be placed behind the document where many people might not bother to find out (Maharaj 2011, p. 636).

Many contractors who might not want to jeopardise their chances of securing the work at hand therefore use this case as a secret weapon. It therefore needs a client to be very careful when reading and signing the contract.

How the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contract Regulations 1999 ensure that exclusion clauses are fair and reasonable. The unfair Contract Act 1977 and the Unfair Terms in Consumer Contracting Regulations 1999 were put in place to regulate the creation, use, and interpretation of the exclusion clause with the sole purpose of protecting the consumer.

The two Acts made it easy for judges to make interpretations of exclusion clauses by eliminating ambiguities in the wording as in the case of Houghton v. Trafalgar Inso Co Ltd. 1954. The Acts were meant to protect weaker parties in the contract because the consumers were in most cases disadvantaged by the clause (Maharaj 2011, p. 640).

The fact that the clauses were part of the contract regardless of how they have been placed on the document meant that only the drafters of the clause and those who are keen enough would be aware of it thus catching many people unaware of their presence. The Acts regulated the use of the clauses in that the drafters of the clauses had to meet certain conditions or otherwise the clause would become void (Maharaj 2011, p. 638).

The clause in this case has to be introduced to clients’ attention before the signing of the contract, or has to be placed in a very visible place for customers to read before they enter an unwritten contract. The two Acts gave courts the power to nullify any exclusion clauses if they found them unreasonable.

This provision usually happens when the terms of the exclusion clause are in conflict with other terms of the contract thus rendering the clause void concerning the repugnancy rule as evident in the case of Mendelson v. Normand 1970. Therefore, all repugnant cases are deemed unreasonable. They can therefore not stand as legal clauses. In the end, they are voidable by the law.

Will Move It Ltd be able to rely on this exclusion clause?

Move It will not be able to rely on this exclusion clause because it does not meet the legal requirements for exclusion clauses as per the 1977 Act as well as the 1999 Act. In the first place, clients should be informed about the exclusion clause before they sign the contract so that they are fully aware of the contract they are signing (Maharaj 2011, p. 638).

To this effect, Move It failed to notify Cool It of the clause. It can be assumed as well that Cool It was not aware of the clause while entering the contract. Thus, it cannot be held liable by the exclusion clause. Under the nature of the document test, the document does not qualify as a contract document because its original aim is different from the purpose it is being used on by inserting the exclusion clause.

The document that the manager was given with the exclusion note was the consignment note, which cannot be deemed as the contract document for the particular work when objectively tested as revealed in the case of Chapleton v. Barry Urban District Council. On the other hand, the notice of the clause must be made aware to customers before they enter the contract, and not after entering the contract (Maharaj 2011, p. 638).

In this case, the clause is believed to have been entered after the entering of the contract because, even if the consignment note is decided to become the contract document, the clause should be on the face of the page where the customer signs. This exclusion clause by Move It is found behind the face of the document where the contract has been signed.

A duty of care exists

A duty of care in this case can be described as the necessary steps that should be taken in a place to prevent the occurrence of an accident. A duty of care comes in the form or rules, structures, and steps that have been put in place to prevent any probable accident from happening (Gray 2011, p. 68).

A duty of care’s responsibility falls within the ambits of authority in charge of a particular facility that is being used by people. Thus, the authority has the duty of putting up measures that would ensure the facility is running according to the law concerning safety measures.

Was a Duty of Care was breached

In proving that a duty of care was breached, claimants have to prove that they did not act negligently for the occurrence to happen. They also have to show that they were within the rules and regulations of the given facility during the happening of the accident thus blaming it on authorities owning the facility (Tan 2012, p. 93). In proving that a breach of care was breached, the claimant has to refer to what the law provides for in terms of how the facility should be managed, and what rules the facility has put in place to secure its clients from injury.

The Damage is Both Direct and Foreseeable

A claimant should be in a position to prove that the damage is both direct and foreseeable. In this case, an occurrence of a certain event should be linked directly as the cause to a damage that might have occurred by showing successive events that led to the occurrence (Burns 2011, p. 658).

On the other hand, the damage can be deemed foreseeable if certain acts of negligence will lead to an accident. Thus, failure to take reasonable steps is what should be attributed to the accident as in the case of Hughes v. Lord Advocate 1963. Under the rule of vicarious liability, employers are legally responsible for commissions and omissions of their employees, regardless of whether the employees were acting under instructions or on their own (Tan 2012, p. 93).

Vicarious liability can also be referred to as an imputed negligence, since a liability can be assigned to an individual who did not cause a certain injury, but by virtue of the individual being related to the person who caused it in a given way. The employer under this case is burdened with the liability because it is assumed that the employee is the agent of the employer and that he or she was working in the interests of the employer when the accident happened.

Tan (2012) states that vicarious liability goes beyond employer-employee relations. It can also be applied in the case of a car accident when the liability is put on the owner of the car even if the proprietor of the car was not in it when the accident occurred (p. 94). In deciding whether the blame should be shifted from the employee to the employer, the court has to establish the following facts.

The court has to establish whether a tort has been committed. In doing this, court will be establishing grounds for the case because the establishment of the tort will be the basis for the case (Gray 2011, p. 69). Secondly, the court has to establish if the cause of the tort is due to the employee because only when the mistake is attributed to the employee is when the tort can qualify for a vicarious negligent consideration.

Thirdly, the court has to determine if the tort was caused by the employee in the act of employment and specifically during his or her scope of work. An employee’s mistake away from duty cannot be laid on to the employer.

How the legal relationship between the parties in tort differs from the relationship in contract law

The difference in parties in a tort law and those in a contract law is not usually very distinct although the two laws have different tenets. In a tort law, it focuses on the foreseeable ability of an event happening (Burns 2011, p. 658). In this case, one party should have been in a position to foresee the event happening. Thus, he or she should have taken an action to stop it from happening.

Failure to do this can be described as negligence to which the negligent party is liable to pay an amount as determined by the court. The legal relationship between two parties under a tort law comes into existence after an event that leads to some form of damage occurs (Burns 2011, p. 658). The court then has to determine if it is a tort or not before the damage can be computed or not.

On the other hand, a contract is entered between parties once the value of the goods or services has been determined. A contract legally binds two parties once they have signed it. It is meant to secure the party’s interests in case there are losses coming out of breach of the contract (Jalil 2011, p. 110). Whereas a contract is binding only to the parties signing it, a tort can become binding to parties who are not directly related to it, but who can be held responsible under the law.

The tort law is legally hinged on negligence on one party, which leads to the damage of another party while the contract law is hinged on the failure of a party to the contract to meet their obligation. Applying the rules on both negligence and vicarious liability to consider whether Sheila and Karen would be able to claim for the injury and damage.

Under the rules of negligence and vicarious liability, employers are held liable for the negligent acts of their employees as long as the acts happen in the employees’ cause of duty (Tan 2012, p. 96). In the first case, Manjit is regarded as an employee of Hurryhaste and hence an agent for Hurryhaste. He is therefore covered by the vicarious liability rule.

Though Manjit is a casual worker with the company, it does not disqualify him from being regarded as an employee by the company. Therefore, he is regarded as one. The accident occurred during Manjit’s cause of duty hence perfectly fitting in the vicarious liability bracket. On the other hand, Karen has no contributory fault to the accident because she had parked her car properly.

During Manjit’s negligent driving, her car was hit. Karen therefore qualifies for compensation from Hurryhaste who is the employer of Manjit in this case. Hurryhaste should pay Karen. If it so wishes, it can surcharge Manjit for his negligent acts. On the other hand, Dave was within his employment duties when he hit Sheila’s car because the accident happened when he was coming from making a delivery.

To this extent, he had to make his way back from the point of delivery. He is thus deemed to be within his duties. The basis of vicarious liability is simply to shift the liability of an employee to the employer. In this case, the liability shifts from Dave to Hurryhaste (Tan 2012, p. 96). Although Dave is seen to have breached certain rules with regard to using the vehicle improperly, it does not take away Sheila’s right to be compensated by Hurryhaste because her fault did not lead to the accident.

Although Sheila did not have her seat belt on when the accident occurred, the blame for the accident does not fall on her. At the same time, it is not the purpose of vicarious liability to prove that she was not having her belt on at the time of the accident. In the case of Dave, as the statement goes, he has been highlighted as having been the one on the wrong.

One element of the tort law is to establish if there was negligence on the part of an individual party in a case and the predictability of the same (Gray 2011 p. 70). In the case of Dave, he was aware of traffic rules, which are to guide him in his driving. However, due to his negligence, he failed to observe traffic rules thus leading to the accident. The law is meant to prove that the person lacked reasonable care hence leading to a likelihood that the person’s negligent acts would lead to harm (Burns 2011, p. 665).

Therefore, according to the rules of negligence and vicarious liability, Sheila and Karen should claim for injury and damage because, were it not have been for the carelessness of Dave and Manjit, the accident would not have happened. Their failure to observe rules and caution while driving was the sole reason for the accident’s happening.

If Dave’s daughter had been injured in the accident, chances are that the law on vicarious liability would still have applied because the van was not supposed to carry unauthorised passengers under traffic law. Dave’s daughter was one. Therefore, Dave’s daughter as an individual party could claim for damages because Hurryhaste’s agent would have injured her due to negligence (Tan 2012, p. 96).

This case though would become complicated because Dave would be required by the company to reimburse it the expenses. On the other hand, the argument that might arise about Manjit’s employment status might be if a casual employee is regarded by the terms of the vicarious liability. By virtue of Manjit being a casual employee, it qualifies him to become an agent for Hurryhaste because he does duties on its behalf (Gray 2011, p. 69).

Vicarious liability does not define an employee’s status, but simply addresses any person working as an agent for the employer. Negligence on the part of an agent is what leads to a tort. The claimant does not have the duty to find out the employment status of the offender before he or she can lay claim for damages that have occurred.

On the other hand, breach of working rules does not affect the claimant’s pursuit of compensation because it is not within his or her jurisdiction to determine whether the offenders were following rules when they caused the accidents. Therefore, Sheila and Karen are legally in order to claim compensation for both injury and damage from Hurryhusttle.

References

Burns, J 2011, ‘Respondeat Superior as an Affirmative Defence: How Employers Immunise themselves from direct Negligence Claims’, Mitchigan Law Review, vol. 109 no. 4, pp. 657-681.

Gray, A 2011, ‘Why Vicarious Liability Must be Abandoned’, Australian Business Law Review, vol. 39 no. 2, pp. 67-84.

Jalil, M 2011, ‘Clarification of Rules of Acceptance in Making Business Contracts’, Journal of Politics & Law, vol. 4 no. 1, pp. 109-122.

Maharaj, K 2012, ‘Limits on the Operation of Exclusion Clauses’, Alberta Law Review, vol. 49 no. 3, pp. 635-654.

Tan, C 2012, ‘Authority, Vicarious Liability and Misrepresentation’, Singapore Journal of Legal Studies, vol. 1 no. 1, pp. 92-111.

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