Discuss Impact Different Types Contract | Formal Contract

Discuss Impact Different Types Contract | Formal Contract

Discuss Impact Different Types Contract the importance of the essential elements required for the formation of a valid contract

Discuss Impact Different Types Contract | Formal Contract Discuss Impact Different Types Contract is agreements which are legally binding on those parties who are enter into a agreement. The agreement made by the parties is willfully. The parties are bound with the contract. The parties have liabilities against each other automatically. (ACCA F4, 2009) (Lawhandbook.org.au, (2015)

The essential elements for making the valid contract are:

  1. Agreement
  2. consideration
  3. Intention to create legal relations
  4. Legal capacity
  5. capacity
  6. Consent

Agreement – The first essential condition for the valid contract is agreement. There should be an agreement between the parties. For making the contract there must be the offer and acceptance from both the side. One party has to make offer and other party has to accept the offer for the valid contract. if there is no offer or no acceptance has been made by the person then there is no legal contract between them or there is no valid contract. the offer which is made by the party must be clear, definite , must be communicated to the other party.

Case- (Harvey v. facey, 1893)

Acceptance can be made by orally or in written or in any manner which is assumed that it is acceptance of the contract.

Case- (Entores v Miles Far Eastern Corporation (1955)

Consideration– the second element is the consideration, in this there should be a consideration between the parties. There should a promise given by the parties that they will pay the consideration. The promise is given by the promisor to promisee.  When the promisor take the promise form the promisee that he has done or he is abstained from doing something in the past, he does or abstain from doing in future, or give promise not doing something in the future. There should be some value which is passed form the one party to other party.

Intention to create legal relations– There should be a intention to create legal relationship between them.  The intention must be free consent if the intention has been taken by any influence, force and fraud then there is no valid contract. For example – like agreement between the husband and wife. In husband wife relationship there is social agreement and which is not enforced by any law, court only considers the domestic arrangement between them. Legal capacity– The contract which is made by the parties must be in legal capacity.  The contract must not be against the any provisions of the law. For example: the contract for committing the murder of a person. So this contract is against the provisions of the law. So there should be legal capacity.

Capacity – The parties who are entraining in the contract must be in capacity. It means both are competent for the contract for making the valid contract if they are not capable then the contract is not held legal. The persons who are not enter in the contract. If they are:

  • If one of the party is minor
  • Unsound mind
  • Any person who is disqualified by the law.

Consent – section 13 of the contract act deals with the consent. Consent must be free from any undue influence, force, fraud. For the validity of the contract the consent should be free from any influence. If these factors are included in the contract then the contract will not valid. It will be held void. There must not be any physical danger in the contract for the parties.  There are some factors which show that the consent is free:

  1. Section 15 of the contract act is defining the coercion.
  2. Section 16 of the contract defines the undue influence. There should not be undue influence for taking the consent.
  3. Under section 17 of the contract says that the consent is not taken by fraud.
  4. If any party makes any misrepresentation in the contract then consent is not free. It is come under section 18.
  5. The section 19, 20, 21 deals with the mistake.

P 1.2 Discuss the impact of different types of contract

The impacts of different types of contract are:

  1. Unilateral contract: There are two parties in this contract. One party is known as offeror and other party is known as offeree. In this contract one party give the express promise to the other party. Unilateral contract is not same as the bilateral contract , in bilateral contract both the parties give the mutual promise to one another. The offeror is under the legal obligation he has to fulfill the contract because the offeree is act according to the offeror promise.
  2. Bilateral contract– In this contract both the parties gives the mutual promise to one another.This contract is arise when the offerer made the promise to the offeree in return of the promises which is made by the offeree.
  3. Special contract– special contract is that in which both the parties are signed the contract and kept one copy of contract by each party. It is also bilateral contract.
  4. Simple contract– These contracts may in the form of written or orally made by the parties. Both the parties are free to decide in which they want to make the contract either orally or in written form. It is depend upon the both the parties.
  5. Verbal contract– The parties are bound to formed the contract orally. They have no choice of written. The contract is made by the parties on the telephone but it is necessary that well document by the parties.
  6. Implied contract– the implied contract is that contract in which the terms which are used in the contract are expressed orally not in the written form. The responsibility is arise from the agreement.
  7. Express contract– The express contract are those contract in which the terms and conditions are expressed clearly. This type of contract is signed by the individual, business, organizations. (Collins, H. (1993).
  1. Void and voidable contract: void contract are those contract which are never formed, thus these types of contracts are not enforced by the law. Example: the contracts which are involved the gambling, prostitution; enter with the person who is mentally ill.

Voidable contract are those contract which are valid agreements, but any of the party make the contract void. Example: contract with the minor, or enter in to the contract who is drunk, or insane. (Tam J., 2015)

  1. Distance sales contract: In this contract there is no opportunity is given to the person for making the inspection of goods before purchasing the goods. Example: the contract is made over the internet or on telephone.

P 1.3 Analyze terms in contracts with reference to their meaning and effect

Terms in contract – The party has to make the various statements for inducing the other party for enter in to the contract. Thus when the dispute is arise then it is difficult for the both the parties that what are the term of contract, and which statement should be considered as a part of the contract. Both the parties are bound under the contract they are bind with the terms of the contract.

The terms in the contract are:

  1. Conditions
  2. Warranties
  3. Exclusion of responsibility terms

There are various terms in the contract but apart from these they are important terms of contract for both the parties.

Conditions terms:  For entering in to the contract the conditions term is most important term. No party cannot enter without the conditions terms in contract. If any party breach the nay condition of the contract then the contract will be treated as void.

Warranties: it is not as mush important as condition. If any parties make the false condition and make breach then the party has to pay the compensation to the other party for the damages.

Exclusion of responsibility terms-

Yes the Unique Mobile Solutions have the exclusion clause because any party is enter in the contract then exclusion clause is automatically given. If in the contract there is something going wrong then party is excluded from the responsibility. If any party signed the contract then they will be automatically bound by the exclusion clause. . (McKendrick, E.)

 Discuss Impact Different Types Contract | Formal Contract

LO 2 Be able to apply the elements of a contract in business situations

P 2.1 apply the elements of contract in given business scenarios

Business contract:  The contract which is made between the small owners then this type of contract is known as business contract.

The various elements which are necessary for entering in to the contract are:

  • Parties: there must be parties for making the contract. The parties are any entity or any separate entity of the business.
  • Consideration: There must be consideration for making the contract. Consideration means that each party can take the profit from the business.
  • Competent party: Both the parties are competent for the valid contract. The parties are competent if:
  1. Party is sound mind.
  2. Not minor
  3. Consent is free from any influence
  4. Party is not drunk, insane.
  • Legal purpose: there should be legal purpose otherwise contract is become void.
  • Terms and conditions: it is first and foremost element in the contract. Parties rights and duties are mentioned in this.

There is contract between EMA’s Managing Director, Joseph and Phil. because both are competent parties. Phil. pays the consideration amount to EMA for not selling the bus for next five days. And joseph is agreed.

2.2 Apply the law on terms in different contracts

  1. There is no valid contract between the parties in first situations because for the validity of the contract, the contract must not be against any provisions of the law and the supply of telephones in UK is illegal.
  2. There is contract between them.
  1. There is contract between the KSE Ltd, and Unique Mobile Solutions Ltd. The CEO of KSE ltd signed the written the hire contract in which the terms and conditions are laid down. Augustine signed that document without reading it. In this there is consideration amount which the KSE have to pay the company. There is offer and acceptance by the parties. In this case three element are exists. These are offer and acceptance, consideration, legal purpose.

2.3 evaluate the effect of different terms in given contracts

The terms in contract are:

  1. Conditions, warranties and innominate terms.
  2. Exemption clause

Effect of the terms in the contract is:

  1. Breach
  • Conditions: condition is one of the terms which are used in the contract. This term is used more than the warranty term. If any person wants to enter in the contract they have to use the condition term, without condition term the contract is not made. If any party in the contract breach the any condition and which will effect the other party or damage the other party then the harmed party recouping their loss from that party.
  • Warranty- this term is less favorable by the parties. Mostly parties used the conditions term. If any party make the breach then the harmed party has right to take the damages from the other party.
  1. Exemption clause: In this the party is excluded from the responsibility if there is going wrong in the contract.

LO3: Understand principles of liability in negligence in business activities

P 3.1 contrast liability in tort with contractual liability

Both tort and contract are come under the common law but there concept is different from each other. The common aspects in both the tort and in the contract are:

  • Both contract and tort are the civil law.
  • The party who suffered the damage can file the suit against the other party for recouping their loss from the defendant. Defendant is also under an obligation to give the compensation to the party. But the plaintiff cannot file suit for giving the punishment to the defendant by the court.
  • Relation- The relation between the parties is created and governed by the contract in contractual liability. The relation between the parties is non- commercial and thus it is imposed by the law.
  • Consent- for making the legal contract there must be consent of the parties. The consent of the parties is free.
  • In tort the consent Is not necessary to take in the contract.
  • Damages is awarded to the harmed party when the party is under the contract suffered any loss from the other party then he will sue the other party for taking back his position in the contract
  • Contractual liability is taken by the party voluntarily. But in tort liability is not undertaken voluntarily by the party.

P 3.2 explain the nature of liability in negligence

Negligence- Negligence is a situation in which person has not intention to harm the individual but accidently he harmed the person. So, if any person hurt someone accidently and has no intention to hurt then it is known as negligence. If any person who hurt someone or done nay negligence then he will be liable to pay the damages to that person as a compensation.

The elements which are necessary in the liability in negligence is that person is hurt by someone and it is done by accidental not intentional.

In this case if the cake is made by the restaurant they are liable for the compensation under the tort of negligence. If it is produced by the some other company the manufacturer is liable not the restaurant.

Case: Donoghue vs. Stevenson

In this case Donoghue and her friend went to the cafe Glasgow. His friend ordered a bottle of Stevenson ttle. When after some drink they found in the beer bottle that a decomposed snail is dropped out from the bottle in to tumbler. Donoghue complained that he has stomach pain and doctor diagnosed her and tell that she has gastroenteritis. Thus both sue the manufacturer of the drink on the part of negligence. So it is held in this case that there is negligence in and it also established the neighbor test. (lawresources.co.uk)

P 3.3 explain how a business can be vicariously liable

PROFESSIONAL negligence- It is a situation in which the duty of care is breached between the professional and the clients.  (negligence.laws.com, 2015)

Vicariously liability is a situation in which the principal is held responsible for the agent and employer is held responsible for the employee. This means that when any act done by the subordinate then their superior is responsible for any act done by his subordinate.

Essential elements in the vicarious liability are:

  1. Vicarious
  2. Liability. (lawteacher.net, 2015)

Professional negligence and normal negligence are the different concept. In negligence the standard is reasonable man. Here it is a reasonable valuator. Any professional valuator will do this mistake then brad is not held liable for the professional misconduct. In this case he did something which is not instructed by the company not to do. So, here is liable for the professional misconduct. Brad is liable for misstatement and professional negligence but in the action for compensation or damages the company has to pay it to Angelina means company is vicariously liable to the torts of brad. So Angelina have right to claim compensation against the loss which she suffer from the brad.

Task 4 apply the elements of the tort of negligence and defenses in different business situations

4.1 Able to apply principles of liability in negligence in business situations

In tort of negligence there should be harmed by the one person to another person by accidently not by the intention. The elements are there are parties and should be harm by the person by accidently.  For example, if a person causes an auto accident because he was driving faster than was safe for the existing conditions, the resulting lawsuit will likely include a negligence claim.

The plaintiff has to prove these four elements :

  1. Duty of care

2, There is breach of duty

  1. Caused damages to him.
  2. Casual connection

These principles are applicable in all business situations.

The defenses are Christian is not known about the brad that he does anything like that. He already told him that does not go beyond your expertise. This mistake is also done by the auctioneers and part he is a lay man so he also does mistake.

4.2 apply the elements of vicarious liability in given business situations
the elements in the vicarious liability are:

These are the element in the vicariously liability:

  1. There must be employer and employee relationship between them.
  2. The employer committed the tort.
  3. The tort which is committed by the employee is must be in the course of employment.
  4. Principal agent relationship
  5. Agent committed the tort.

According to the elements of the vicarious liability the Christian auctioneers is liable to pay the compensation for the damage which is faced by the Angelina. In this case the Christian employer Brad give the wrong advice to the Angelina so there is employer and employee relationship is exit between the BRAD and Christian, the advice which is given by the brad in the course of employment. So Christian is responsible for the act committed by the Brad.

  1. ACCA (2013) F4 Corporate & Business Law (Eng) Study Manual for exams in 2013 , FBT
  2. amance, K. (2015). Find a Lawyer | Find an Attorney – Present Your Case to Legal Match. [Online] available at: [Accessed 10 Jun. 2015].
  3. Anon,(2015).[online] Availableat:freeassignmenthelp.com.uio.no/studier/emner/jus/jus/JUS5260/v12/undervisningsmateriale/Terms.pdf [Accessed 10 Jun. 2015].
  4. Business Essentials (2007) Supporting HNC/HND and Foundation Degrees : Business Law Course Book; BPP  Learning Media
  5. (Collins, H. (1993)  the law of courts. London , Butterworth
  6. Denoncourt, Janice (2012-2013) Rutledge Revision Questions and answers, Business law, London and NY
  7. Donoghue v stevenson [1932].online available at www.e-lawresources.co.uk/Donoghue-v-Stevenson.php ( accessed 11 june, 2015 )
  8. org.au, (2015). What is a contract?. [online] Available at: freeassignmenthelp.com.lawhandbook.org.au/handbook/ch12s01s01.php [Accessed 10 Jun. 2015].
  9. (Collins, H. (1993). The law of contract. Butterworth
  10. Maclntyre, E (2007) Business Law, 3rd edition, Pearson Longman
  11. Vicarious liability, 2015 [online] Available at: 7. freeassignmenthelp.com.lawteacher.net/free-law-essays/contract-law/what-is-vicarious-liability-contract-law-essay.php  [Accessed 11 Jun. 2015].

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