Aspect of Contract and Negligence for Business

Aspect of Contract and Negligence for Business

Executive Summary

Contract is the mutual agreement between two parties for their benefit. Terms and conditions of the contract must be understandable to both parties to make a valid contract. Parties of the contract must be mentally silent and competent. Breach of duty and breach of trust is considered as negligence of the contract which is civil crime. Vicarious liabilities occur if there is agency principal relationship in the contract.

Introduction

In business, contract has been made frequently on various terms and conditions on related topic which is very crucial for business people.  Essential elements of the valid contract will identify in the assignment. Element of the contracts will be shown through case study. Principle of liability in negligence will discuss in the assignment. Under different business situation principal of negligence will discuss in the assignment. This assignment will discuss about the different aspect of contract among the Essential IT support and it employee. Importance of essential contract, impact of contract and different terms of contract will be discussed in the first task, in the second task application and impact of different task will be discussed. In the third task liability in tort and nature of liability will be analysed.

A valid contract needs some elements. A contract will be deemed as valid when all of the elements of the will present in the contract. Among the different element of contract most important are two parties, valid agreement, legal consideration are most important. All mention elements have significant impact on the business contract.  The importance of the elements of valid contract is discussed here.

Agreement: In a valid contract there must be an agreement which includes an offer and an acceptance. There will two parties naming the offeror and the offeree. One party will give offer and another party will accept the offer. Offer is the starting point and then acceptance comes after the offer has made to the offeree. So without an agreement containing offer and acceptance a valid contract can`t be made (Kim, J., 2000).  In the case study we see that there is an agreement between the essential IT support and university of Sunderland about the service provide by the company.

Consideration: Consideration comes after the stage of offer and acceptance without which a valid contract can`t be made even after the offer and acceptance have made. Consideration is nothing but the monetary value, service, and abstinence from doing something etc. Where there is no consideration, there is no contract. In the case we see that the contract is not valid because there is negligence and faulty in the contract with it client particularly with the Bradford university (Fuller, 1941).

Intention to create legal relations: Actually a valid contract is one kind of legal binding between the contracting parties on a certain terms of the contract. So the contracting parties must have a tendency to build up a legal relation between or among those parties.

Capacity: It means that contract parties must be capable to enter into contract in accordance with the rules of contract law. Person having with mental disorder or person under the age of 18 cannot enter into valid contract.

So from the above discussion it may be advice to Essentials IT support that all of these main elements must be considered while making contract with its customers like University of Sunderland and Bradford University. If one of the elements is absent, then the contract will not be deemed as valid one rather may be considered as void, voidable and unenforceable contract.

Contracts can be divided into a few broad categories which are given here with their impact-

Contract by deed

Contract by deed is the formal legal contract where the term of the contract is written and signed, witnessed. Such kind of contract is valid and legal contract where the essential elements of the valid contract can be found (Anson, Beatson,  Burrows, and Cartwright, 2010). The very important impact of such kind of contract is that the injured party can take action if there is any breach of the contract.

Simple contract

Simple contract is informal contract which may be written or oral. Simple contract is informal and it may not be enforced if any breach is occurred. So such kind of contract can be forbidden in the Essential IT support as there have been problems with faulty contract.

Bilateral contract

In bilateral contract there are two parties; here a party is compel to change by keeping promise to another party. The promise about exchange is proper to the extract point of legalising. In a contract for sale one party may be buyer and another party may be seller (Herguera, 2000). So Essentials IT support can make such kind of contract abiding by all of the elements of a valid contract.

Unilateral contract

It means such kind of contact where a party assure to another party to return under an act to the other one. Such kind of contract is also unwritten and informal and has less effect or enforceability if there is breach of contract (Herguera, 2000).

Contract by Distance selling: In the modern era of the IT based business, distance selling has great importance to every company. A company like Essentials IT support can make contract by distance selling through the own website, email and other way which affect the contract as like other contract. There are certain rules regarding to distance selling which must be complied by Essentials IT support.

In a business contract there are many types of term are found like implied term with are not mention in the agreement, express term which are clearly mention in the contract. Usually a valid contract is made based on some terms which include the details about the contract. There may be different kinds of terms in a contract which are going to be discussed with their meaning and effect below-

Expressed term: Express terms are such kinds of terms which are expressed during making the contract. In such situations the terms may be expressed either in written form or orally (O'rourke, 1995). If the terms of a contract are done with written form, then the contract can be enforced and injured party can take legal action if there is any breach of the said contract. But such kind of effect may not be found if the terms of the contract are orally made.

Implied terms: Implied terms of a contract are such kinds of terms which neither orally made nor made in written from rather remain implied. Implied terms also have great effect as there are certain rules linked to implied terms. For instant, Sale of goods Act 1979 Section13 says that where the product has been traded by description, that produce have to be accord with the description. So Essentials IT support must comply with the implied terms while making contract with their customer like University of Sutherland and Bradford University.

Condition: It is the issues that are related to main goal and objective of contact. Actually, a contract has made up on basis of different condition. So finding any branch of condition, the victim party may take legal action as well as may make the termination of contract. A product of the Essentials IT support has been sold by description by using website description, but after the product has been handed over to the buyer, the buyer finds miss description; he may refuse to accept the product.

Warranty:  generally it is used by product or service manufactories by which company assure the client to recover any faulty service or product. Warranty is another type of term which means the assurance of the performance of the made contract. It stands after the condition with less important and if any breach is occurred, the injured part can get compensation but can`t make an end of the contract (Blischke, W., 1995)

Intermediate terms: Such types of terms are neither condition nor warranty and very often are determined by the court action on the basis of various complex situations. Such terms are also called innominate terms. Such terms may have also great effect by the analysis of court and if the basic object of the contract is breached, the victim party may terminate the contact and can get compensation by the help of court.

In the following answer it has been described that there are some elements necessary for making a contract based on valid which are agreement, deliberation, purpose to enter into authorized connection, capacity to make contract, legality of contract. While working, an employee of the Essential IT support does a wrongful act with one of the teacher of Bradford University, and then the company can be made vicariously liable. When all of the elements are found in a contract, then it can be said as a valid contract. And every element has great role in making a contract. Now the role on capacity of making contract is given below referencing with Essentials IT support and its customers.

Role on capacity of making contract:   In a business contract both parties must have ability and capacity to make contract without this any contract are not consider as valid contract. Actually a contract is one kind of agreement between two or more parties. From the definition of contract it is clear that there needs two or more parties. But every person can`t enter into a contract (Clemons, E.K. and Chen, Y., 2011). According to the contract and other business law, a person without sound mind and person under the age of 18 can`t enter into legal written contract. But another person can make contract on behalf of the minor in accordance with law.

In another point it also necessary to say that the contracting parties must be man or legal entity. In the eye of law, a company or corporation, business firm etc are deemed as legal entity which can make contract by themselves with their customer or someone else. So from the discussion it can be said that Essential IT support and Bradford University are one kind of legal entity and can make contract with each other and also be sued if any breach of contract is occurred.

It has been already discussed that a valid contract has some express and implied terms. And among the implied terms some are found in various statutory laws which are given below referencing with Essential IT support.

Sale by description: According to the section 13 of the Sale of Goods Act 1979, when product of a company is sold by description, then that product must accord with the description given. And there is any miss-description, the company will be liable. For example, a product of the Essentials IT support has been sold by description by using website description, but after the product has been handed over to the buyer, the buyer finds miss description; he may refuse to accept the product.

Satisfactory quality: Section 14 says that every product must have satisfactory quality for fulfilling the purposes of buying the product. Satisfactory quality includes the durability, safety and fit for the use. So if any product of Essential IT support fails to carrying satisfactory quality, the company can be liable.

Sale by sample: Section 15 says about on the time of sale the product has to be like sample product, then that product have to be accord with the sample shown. For example, one of the customers of Essential IT support Bradford University make an online order for buying a product and the company sent a sample by one its staff. The university agrees to buy the product and pays the payment. But after the product is handed over, similarity with the sample is not found. In such point, the company can be held liable.

In relation to terms of the Essentials IT support it can be said that some of its terms may be expressed while making contract with customer. And all the rules also are applied while making sale on online.

Exclusion clauses also play a vital role in various contractual terms. Exclusion clauses are such kinds of terms of the contract through which one party can exclude liability arising from the contract (Ordover, J. and Weiss, A., 1981). For example, from the scenario it has been seen that Essentials IT support has given an exclusion clause in the agreement paper which has been made with the Bradford University. The clause says that "any implied condition or warranty is here by omitted. According to the provision of Unfair Contract Terms Act 1977, such clause is not valid and has no legality.

Section 5 of the Act says that a company or manufacturer can`t exclude its obligation in carelessness for the misfortune emerging from the imperfections in item normally supplied for private use.

Section 6 (2) says that no restriction can be given in relation to the sale of description, sample, fitness for proposes, satisfactory quality of a product.

Section 6 (3) says that if the person doesn`t deal as consumer, such liability may be restricted in so far as the term is reasonable. Finally, the summary of all other sections is that if exclusion clauses destroy the main object of the contract unreasonably, then such clauses are not enforceable.

So finally, the Essential IT support can be sued by the Bradford University and Sunderland University for the Failure of the quality of the product in accordance with the description.

Contract law and tort law are the two different sections of civil law system. Generally contract law deals with various contractual complexities and tort law deals with various tortuous situations. So there are some difference between the contractual liabilities and tortuous liabilities. Firstly, contractual obligation emerges from the agreement between two gatherings where the convoluted risk emerges from the typical tenet of society. Secondly, contractual liability needs a contract to arise where the tortuous liability needs no contract as well as any relation between the wrongdoer and the injured. For example, a driver may be liable for the reckless driving which injuries a people with whom the driver has no relation. Thirdly, contractual liability may arise from breach of contract, lack of performance of the contract and so on. On the other hand, tortuous liability may arise from negligence, assault, battery, defamation, vicarious liability and so on (Epstein, R.A., 1985).

 Negligence is one of the important terms used in the area of tort law. Negligence means carelessness while doing one`s duty or something. According to tort law, negligence means and includes such situations where a person fails to take reasonable care like a prudent man towards other while in duty (Calabresi, G. and Hirschoff, J.T., 1972). The nature of liability of negligence depends on certain elements like a duty of take care, breach of the said duty, ultimate damages arising from the negligent work and all of these are described here below.

Duty of take care: In negligent case, the petitioner must demonstrate that he owed an obligation of taking consideration by the respondent. If there is no duty of take care towards the claimant by the defendant, then negligence can`t be found (Winfield, P.H., 1934).

Breach of the duty: After establishing the question of duty of take care, the claimant has to show that the defendant has failed to take care or the breach of the duty has been occurred.

Damages: The third element of the negligence is damages which have been caused for the carelessness. If there is no damages occurred by the defendant failure of taking reasonable care of duty, there is no negligence.

An ESSENTIAL IT supports has a duty to take reasonable care while making its equipment’s for customer or clients. And if any client is under loss for the lack of such carelessness, he may raise the question of negligence. Essential IT support can be sued by the Bradford University and Sunderland University for the Failure of the quality of the product in accordance with the description.

When one person is held liable for the wrongful activity of other, then it is called vicariously liability. According to the view of (Douglas, W.O., 1929), in the standard of mediated liability, an innocent person can be held liable for the act of another related to him through various way like master and servant relationship, employer and employee relationship, business and agent relationship, business and partnership relationship. Under employee and employer relationship a business like Essentials IT support can be vicariously liable for the act or omissions of its employee. But there needs some elements which are given below.

Employment relationship: For establishing the vicarious liability of a business for its employee it must be shown that there exists an employment relationship between the employee and the employer or business (Gabel, J.T. and Mansfield, N.R., 2002). If the wrongdoer is one of the employees of the company, then the company can be held vicariously liable. It can be done on the basis of employer-employee relationship. For example, while working, an employee of the Essential IT support does a wrongful act with one of the teacher of Bradford University, and then the company can be made vicariously liable.

In the course of employment: The second main element of vicarious obligation is that the wrongful demonstration must do over the span of livelihood. So if any employee of Essentials IT support does a wrongful act out of office time or during the personal working time, then the company can`t be made liable under this principle (Gabel, J.T. and Mansfield, N.R., 2002).

So from the above discussion it can be said that Essentials IT support can be held vicariously liable for the wrongful act of its employee, agents or partners. For example, Essentials IT support has a duty to take reasonable care while making its equipment’s for customer or clients. And if any client is under loss for the lack of such carelessness, he may raise the question of negligence.

Conclusion

A valid contract must contain consent, legality, and capability. Written contract is effective contract than oral contract. A contract will valid contract when all terms are abide and accepted by both parties. All of the terms and conditions of the contract will understandable to both parties. Tort liability occurs because of breach of duty. If parties of the agreement do not act according to conditions, it is the contractual liability. Damage occur by one party but liability occur by other party is vicarious liability. After completing this assignment it has been found the different aspect of contract among the Essential IT support and it client are partly valid. Importance of essential contract, impact of contract and different terms of contract was discussed in the first task of this assignment, in the second task application and impact of different task was discussed. In the third task liability in tort and nature of liability was analysed.

Reference(s)

Anson, W.R., Beatson, J., Burrows, A.S. and Cartwright, J., 2010. Anson's law of contract. Oxford University Press.

Blischke, W., 1995. Product warranty handbook. CRC Press.

Calabresi, G. and Hirschoff, J.T., 1972. Toward a test for strict liability in torts. Yale Law Journal, pp.1055-1085.

Clemons, E.K. and Chen, Y., 2011, January. Making the decision to contract for cloud services: managing the risk of an extreme form of IT outsourcing. In System Sciences (HICSS), 2011 44th Hawaii International Conference on(pp. 1-10). IEEE.

Douglas, W.O., 1929. Vicarious liability and administration of risk I. Yale Law Journal, pp.584-604.

Epstein, R.A., 1985. Products liability as an insurance market. The Journal of Legal Studies, pp.645-669.

Fuller, L.L., 1941. Consideration and form. Columbia Law Review, pp.799-824.

Gabel, J.T. and Mansfield, N.R., 2002. The information revolution and its impact on the employment relationship: An analysis of the cyberspace workplace. American Business Law Journal, 40(2), pp.301-354.

Herguera, I., 2000. Bilateral contracts and the spot market for electricity: some observations on the British and the NordPool experiences. Utilities Policy, 9(2), pp.73-80.

Kim, J., 2000. Contesting the Enforceability of a Premarital Agreement. J. Contemp. Legal Issues, 11, p.133.

Ordover, J. and Weiss, A., 1981. Information and the law: evaluating legal restrictions on competitive contracts. The American Economic Review, pp.399-404.

O'rourke, M.A., 1995. Drawing the Boundary Between Copyright and Contract: Copyright Preemption of Software License Terms. Duke Law Journal, pp.479-558.

Winfield, P.H., 1934. Duty in Tortious Negligence. Columbia Law Review, pp.41-66.

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