CONTRACT:

A contract is a legal binding between two companies, businesses or parties that unites
them in an agreement which is protected by law. A contract between the parties can be
created verbally, in writing, by conduct or by all these means.

And this contract becomes a valid contract if it has all the essential elements described
as follows: It is important to mention that contract is enforceable only if all these
elements are present in the contract.

ESSENTIALS ELEMENTS OF A BUSINESS CONTRACT AND THEIR IMPORTANCE:

i). Offer and acceptance: Offer is the starting point of the contract. In order to create
contract there must be a definite and well-defined offer by one party (which will show
willingness of the offer or for an action) and clear acceptance of the same by the other
party. While making an offer the offering party may specify the time limit for validity of
the offer but even if it’s not specified, the offer will be valid for a logical time period,
until accepted or cancelled by the offering party.

The acceptance of the offer and that means full acceptance to what is being offered not
partial (partial acceptance is a counter-offer, which invalidates the contract), validates
the offer to transform it into a contract.

Though all the elements must be present to create a contract, but offer and acceptance
make the basis of the contract or it actually lays the foundation of the legal agreement
between the parties.

ii). Intention to create legal relationship: A contract requires that the parties
aim/propose to enter into a legally binding agreement: i.e; the parties entering into the
contract are willing to create legal relations and fully understand that the agreement can
be enforced by law. If a contract has been signed between two parties, then one party
will be able to sue the other if it does not fulfill the contractual provisions.

iii). Competency or ability to get into a contract: The law does not give everyone the
liberty to enter into a contract; rather certain specific qualifications are prescribed to
achieve the competency to get into a contract. To be legally competent to enter into
contract one must be of the age of majority (should not be minor), having sound mind
and has not been disqualified by any law.

iv). Free consent: Free consent is an essential element of a valid contract. It is inborn for
any agreement that all the parties must agree to a common goal. To create a valid
contract, mere consent is not enough, rather the consent must be free consent
according to law: A free consent is not caused by, coercion, undue influence, fraud,
misrepresentation and mistake.

v). Lawful Consideration: In order for a contract to be binding it must be held up by

valuable consideration. Consideration is what each party gives to the other as the
agreed price for the other’s promises. Usually the consideration is the payment of
money but it need not be; it can be anything of value including the promise not to do
something, or to refrain from exercising some right. Money, goods and services are the
most common examples of consideration.

vi). Lawful Object: The object of an agreement must be valid. Object is the purpose or
design of the contract. For example, if a building is hired to setup a business, say private
hostel, the object of the contract is to run a private hostel.

vii). Possibility of performance: If the agreement is about ac action which is legally,

physically or practically impossible, then it cannot be enforced by law. So if an
agreement fails to satisfy the legal requirements, it cannot turn into a contract, rather a
void agreement.

viii). Not declared void or illegal: The agreement though satisfying all the conditions
for a valid contract must not have been expressly declared void by any law in force, in
the country.

TASK-1(b)

IMPACT OF DIFFERENT TYPES OF CONTRACT:

1). Unilateral Contract: In a unilateral contract the offering party makes a promise in
return of specific act by the accepting party. For example a sum of money may be
offered by the offeror in return of provision of information by the other. If the offeree
gives acceptance, then this act is enough to get the parties into legal binding or
contract. This contract is also termed as a one-sided contract wherein only one party
(offeror) assumes the obligation under the contract.

2). Bilateral Contract: In bilateral contracts both the parties make promises: the offeror
promises to do an act in return of the promises of the acceptor. For example; sale of
goods or services. In bilateral contract, both the parties are bound to fulfill the terms of
the agreement.
3). Speciality Contract: It is a formal contract, used in various business transactions;
such as: lease of property and in partnership deeds. In this, both the parties sign a
written contract as a documentary proof of the contract and both must retain the copy
of the contract.

4). Standard Contract: When two companies enter into an agreement to do business

together, the agreement is sealed and documented to form a standard contract. For
example; two insurance companies can get into an agreement; they would be legally
bound and can sue each other in case of breach of contract.

5). Verbal Contract: It is based on verbal communication of the contracting parties but
it is not documented or there is no formal evidence of the contract. So these contracts
may give rise to disputes and cannot be challenged legally, in absence of evidence.

6). Written Contract: In written contract, the terms are clearly expressed and agreed
upon by the contracting parties, at the time of contract formation. The written contract
is signed by both the parties as documentary evidence for the legal binding.

7). Implied Contracts: As the name implies, the terms in this contract may not be
clearly expressed in words but it comprises of the obligations arising from the
agreement. For this contract there is an act or conduct of a party that legally binds them
and court implies the contract depending on the nature of the conduct. This may be
implied in case of renewal of contracts between two contracting parties.

8). Simple Contract: The contracts must be kept in written form so that both the parties
fully understand the terms of the contract, which may give them a legal protection in
case of breach of the contract or damages caused by the contracting party. It might be
in written or verbal form.

9). Void Contract: It is not a valid contract at all. It has no legal effect and it is not
enforceable. An example is the one where the subject of the contract is illegal.

10). Valid Contract: A valid contract contains all essential elements of a contract, thus is
legally binding and enforceable (as explained in detail).

TASK-1(c)

Meaning and effect of different types of terms in a contract.

Terms are the promises the parties make to one another as part of the contract. The
terms therefore determine the rights and obligations of each party to the agreement.
 1. Express terms. These are promises specifically made by either of the parties at
the time of the contract and it becomes part of the contract.
2. Implied terms: Implied terms are promises which are not specifically agreed by
the parties, they may not even have been mentioned or considered, but which
are nonetheless presumed to be part of the contract. Terms may come to be
implied into contracts, either by Parliament under a statute or by the courts.

It is well established that a contract may be subjected to terms that are sanctioned by
the custom, whether commercial or otherwise, they have not been expressly mentioned
by the parties. .

3. Conditions and Warranties: Contract terms have either been classified as

‘conditions’ or ‘warranties’ for the purpose of deciding what remedy is available to the
‘innocent’ party in the case of a breach.

4. In nominate (intermediate) Terms: According to this approach, the ‘innocent’ party

will only be able to terminate the contract if the effect of the breach was to deprive him
of substantially the whole benefit of the contract. 5. Exclusion clauses: Many contracts
include a term by which one party seeks to limit financial claims against it in the event of
loss or damage to the other party, or to exclude itself from legal liability altogether.
Exclusion clauses are subject to control by both the courts and statute, to prevent
abuses.

TASK-2

Barker and Clive Solicitors

Clegdon

January 25, 2015

Carl Smith

Training Officer

Address….

Subject: Legal issues and laws involved in online purchase of goods.

Dear Carl,
Hope that this letter finds you in good spirit. I am writing to you in response to your
letter wherein you have inquired about the legal issues involved in online purchase of a
set of DVDs on Team-building training.

I have studied your matter and want to inform that Under the Consumer Contracts
Regulations your right to cancel an order starts the moment you place your order and
doesn’t end until 14 days from the day you receive your goods.Once the contract is
cancelled, any credit agreements entered into at the time of the contract are cancelled
as well. A number of laws give consumers a legal right to cancel contracts in specific
transactions within a short time after the consumer signs the contract, and without
giving the seller or other party a reason or having to show “legal cause.”

In order to cancel, the buyer must sign and date the cancellation notice, which must
state that the buyer is canceling the contract. The buyer should send the notice to the
seller by certified mail, return receipt requested, at the address that the seller has given
in the sale documents. The buyer should keep a copy of the notice for his or her own
records, and to be able to prove that the notice was given and what was said. Since you
e-mailed Classic Training to cancel the order in less than an hour, then your order may
be cancelled by virtue of law.

Direct Training invited you with their advertisement showing the price £75 for the DVD
set. Law considers the price tag as an invitation for you to make an offer to purchase the
item at that price. The offer was clear, definite and explicit and there was nothing to
negotiate, then your acceptance completed the contract on the terms specified by
Direct Training at the time you placed the order. However, if the price advertised on the
website turns out to be incorrect, then they do not have a legal commitment to
complete the sale: By law an advertised price is not a contract of sale, so the seller can
refuse to complete the transaction if the price has changed, in likelihood that advertised
price was not deliberately misleading.

If there is an obvious error in a price displayed, the supplier will not be bound by that
price if the supplier corrects the error and informs the consumer of the correct price
before the sale is concluded. The supplier is not obliged to sell the goods to the
consumer at the patently incorrect price. Since Direct Training corrected the error and
informed you via e-mail, they are not bound by law to sale the DVD set on the
erroneous price. So, its better not to expect any favor as it is unlikely that any action will
result in compensation; especially as technically the product was not sold.

After having discussed the legal issues in detail, it would be more practical and advisable
if you let the order completed with Classical training instead of direct training. It would
at least save £10 to the company.
Hope that the letter has addressed the right legal concerns.

Sincerely,

TASK-3

Barker and Clive Solicitors

Clegdon

January 25, 2015

Dear Lan Page,

I am writing you with reference a letter from an apprentice’s mother. Asad’s mother
wrote about the details of the apprenticeship they entered with Mr.Abdul Bashir. The
apprenticeship signed between Mr. Abdul Bashir and asad legally binds them into
contract for a period of three years. As per law, the training contract legally binds Asad
and Abdul Bashir for the term of the apprenticeship (3 years). The standardized contract
terms define the obligations of apprentice. Moreover, if Mr. Abdul Bashir is offering
apprenticeships for quite some time now, it must have also been signed/approved by a
regulatory body, by approving the given terms and conditions. As long as everything
within the contract is agreed upon and signed and dated by both parties, it is legally
binding.

2). When two companies enter into an agreement to do business together, the
agreement is sealed and documented to form a standard contract. The prominent
advantage is that minimum risks are involved and reduce legal costs. The standard
contracts also provide greater certainty regarding the contract terms, providing clear
legal specification and protection to both the parties. It saves time and costs by leaving
little room for negotiations.

The main disadvantage of the standardized contract is the Boilerplate. It is what has
been deliberately missed out of the contract. So, winning a dispute would not bring any
advantage if the person issuing the contract has deleted the part that says the loser in
litigation will pay the winner’s attorney fees. Another problem with boilerplate is the
section that says disputes will be resolved by arbitration instead of a lawsuit.

Price fixing is another disadvantage of standardization of contract: prices are made part
of the standardization.
Language problem is a major disadvantage. Use of some words may change a simple
proposal to an obligation. Just as specified in Clause (a) of the standardized contract
Asad signed in apprenticeship.

The standardized contract inherently favours the issuing party. Like it favous Mr. Abdul
Bashir being the employer and issuer of apprenticeship terms.

Would be waiting for your take on the same.

Regards.

………..

TASK-4

Barker and Clive Solicitors

Clegdon

January 25, 2015

Hotsafe Ltd.

Vicarious liability occurs in case of breach of any term or part of the contract by an
employee acting on behalf of the company; thus the owner of the company will be held
liable. Same rule applies in the case of various contracts and business dealings. As per
definition of Winfield, Liability arises from the breach of the duty, as fixed by law. Thus
indirect responsibility lies on Hotsafe Ltd as a result of inability to carry out the service
by one of the employee of the company; the breach of the duty calls for compensation
of unliquidated damages.

Legal liability in this case arises as a result of breach of contract that you have entered
into with Garside. The damages occurred to Garside are the result of negligence. And
negligence has significant affect in business contracts. As per business contract signed
between your company and Garside, your company was obligated to carry out the
service as per schedule. As per law, if a party to a contract suffers loss for the negligent
act of the other, the plaintiff is entitled to seek relief for the negligence. The presumed
negligence in this case is satisfying the four conditions for the award of damages.

1. Your company was bound to perform the legal duty.

2. Failed to perform that duty;
3. The plaintiff (Garside) suffered an injury or a loss;
 4. The negligent act is the proximate cause of the injury.

You will have a defense against this negligence only if the negligence act also has some
contribution on part of Garside, depending upon his share in this negligence. But this
can only be investigated on court’s order.

Another defense would be to show that you have taken all reasonable steps to ensure
the prevention of such acts or omissions therefore providing a statutory defense. If you
are having in place an up to date policy, a code of conduct, responsibility division and
fixing, implemented trainings, and clearly communicated policies to all the employees of
Hotsafe Ltd. In this case , any incident resulting due to negligence of an employee
should be followed by a strict action against the employee. This may save the company
against any serious damage claim.

I hope that this would give the necessary legal perspective on the issue and you get out
of it with the appropriate measures.

Regards.

……………….

References

Webpages

 ,Manual of HND Aspects of Contract and Negligence in Business – Final.


 .plea.org/legal resources
 legal-dictionary.thefreedictionary.com apprenticeship
 training.gov.apprentices apprenticeship traineeship guide.

smallbusiness.chron.coml

 .
claytonutz.com/publications/news/200712/05/tips_for_using_standard_form_cont
racts.page
 http://www.ukessays.com/essays/construction/the-importance-of-using-
standard-forms-of-contracts-in-construction-industry.php
 scholarship.law.wm.edu/cgi/viewcontent.cgi?article=3364&context=wmlr
 http://www.acquisition.gov/far/html/Subpart 22_4.html
 http://www.contract/Importance Of The Essential Element Law Contract Essay
(1).mht
 http://www.britannica.com/EBchecked/topic/600206/tort/16466/Comparative-
classification
 http://thismatter.com/money/insurance/legal-liability.htm