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NAME OF STUDENT REGISTRATION NO. UNIT TITLE ASSIGNMENT TITLE ASSIGNMENT NO NAME OF ASSESSOR SUBMISSION DEADLINE Dai Hong Ngoc 1050001001 Unit 5 Aspects of Contract and Negligence for Business Contract In Business Situations 1 of 2

I, __________________________ hereby confirm that this assignment is my own work and not copied or plagiarized from any source. I have referenced the sources from which information is obtained by me for this assignment.

________________________________ Signature

_________________________ Date



Unit Outcomes
Outcome Evidence for the criteria Feedback Assessors decision
First attempt Rework

Internal Verification

Explain the importance of the key essential elements required to the formation of a valid contract


Understand the essential elements of a valid contract in a business context LO1

Discuss the impact of different types of contract


Analyse terms in contracts with reference to their meaning and effect


Apply the elements of a contract in a given business scenarios


Be able to apply the elements of a business contract in business situation LO2

Apply the law on terms in different contracts


Evaluate the effect of different terms in given contracts


Merit grades awarded Distinction grades awarded

M1 D1

M2 D2

M3 D3

( ) Well-structured; Reference is done properly / should be done (if any) Overall, youve

Areas for improvement:



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FOR INTERNAL USE ONLY VERIFIED YES NO DATE : ........................................................................... VERIFIED BY : ........................................................................... NAME : ...........................................................................

Introduction In this report Iam required to present : Discussion about the impact of different types of contracts. Analyzingterms in contracts with reference to their meaning and effect. Be able to apply the elements of a business contract in business situation. Apply the elements of a contract in a given business scenarios, Apply the law on terms in different contracts, Evaluate the effect of different terms in given contracts. Methods and resources in doing the report: Access all of the current research resources, including surveys, data services, centres, programmes and initiatives. reference material, tutorials, books ...to find the appropriate method for each question Expect to achieve in your learning after making the report: Understanding of aspects of the law of contract and tort and the skill to apply them, particularly in business situations. - Understand the essential elements of a valid contract in a business context - Be able to apply the elements of a contract in business situations - Understand principles of liability in negligence in business activities - Be able to apply the principles of liability in negligence in business situations.

Iam reporting to the legal Clark, in a British firm located in Vietnam. A client (Ms May from UK) has come to seek my companys advice on several legal issues, which is new to her. Ms May is part of an initial set-up of a small British based company, Brit Ltd (a fictitious company) selling dresses and ladies apparels both in UK and through their own website. She is to be located in Vietnam to seek dress makers to make specific dresses for both UK and the Internet Market. I need to pen down notes and to provide my opinions to the legal officer who is assigned to May on the following legal matters and possible nature of the claims

Explain to May the importance of the elements required for the formation of a valid contract (1.1)

In this part I will give May the primary information and knowleadge of making a contract. After that I will apply the regular form to Mays stuation. First of all we will find out the concept of a contract : an agreement between two or more persons which creates an obligation to do or not do a particular thing A legal relationship consisting of the rights and

promises constituting an agreement between the parties that gives each a legal duty to the other and also
the right to seek a remedy for the breach of those duties. [Blacks Law Dictionary, 6th ed. Elements At common law, the elements of a contract are offer, acceptance, intention to create legal relations, and consideration. Mutual assent

At common law, mutual assent is typically reached through offer and acceptance, that is, when an offer is
met with an acceptance that is unqualified and that does not vary the offer's terms. The latter requirement is known as the "mirror image" rule. If a purported acceptance does vary the terms of an offer, it is not an acceptance but a counteroffer and, therefore, simultaneously a rejection of the original offer. The Uniform Commercial Code notably disposes of the mirror image rule in 2-207, although the UCC only governs transactions in goods in the USA. Offer and acceptance Main article: Offer and acceptance

The most important feature of a contract is that one party makes an offer for an arrangement that another
accepts. This can be called a concurrence of wills or consensus ad idem (meeting of the minds) of two or more parties. The concept is somewhat contested. The obvious objection is that a court cannot read minds and the existence or otherwise of agreement is judged objectively, with only limited room for questioning subjective intention: see Smith v. Hughes.[6] Richard Austen-Baker has suggested that the perpetuation of the idea of 'meeting of minds' may come from a misunderstanding of the Latin term 'consensus ad idem', which actually means 'agreement to the [same] thing'.[7] There must be evidence that the parties had each, from an objective perspective, engaged in conduct manifesting their assent, and a contract will be formed when the parties have met such a requirement.[8] An objective perspective means that it is only

necessary that somebody gives the impression of offering or accepting contractual terms in the eyes of a reasonable person, not that they actually did want to form a contract. The case of Carlill v Carbolic Smoke Ball Company[9] is an example of a 'unilateral contract'. The term unilateral contract is used in contract law although ultimately there is an offerer and an offeree and a consideration (which may be an act), and in Australian Mills v The Commonwealth,[10] the High Court of Australia considered the term "unscientific and misleading".[11] Obligations are only imposed upon one party upon acceptance by performance of a condition. In the United States, the general rule is that in "case of doubt, an offer is interpreted as inviting the offeree to accept either by promising to perform what the offer requests or by rendering the performance, as the offeree chooses."[12] Offer and acceptance does not always need to be expressed orally or in writing. An implied contract is one in which some of the terms are not expressed in words. This can take two forms. A contract which is implied in fact is one in which the circumstances imply that parties have reached an agreement even though they have not done so expressly. For example, by going to a doctor for a checkup, a patient agrees that he will pay a fair price for the service. If one refuses to pay after being examined, the patient has breached a contract implied in fact. A contract which is implied in law is also called a quasi-contract, because it is not in fact a contract; rather, it is a means for the courts to remedy situations in which one party would be unjustly enriched were he or she not required to compensate the other. For example, a plumber accidentally installs a sprinkler system in the lawn of the wrong house. The owner of the house

had learned the previous day that his neighbor was getting new sprinklers. That morning, he sees the
plumber installing them in his lawn. Pleased at the mistake, he says nothing, and then refuses to pay when the plumber delivers the bill. Will the man be held liable for payment? Yes, if it could be proven that the man knew that the sprinklers were being installed mistakenly, the court would make him pay because of a quasi-contract. If that knowledge could not be proven, he would not be liable. Such a claim is also referred to as "quantum meruit".[13]] Consideration Main article: Consideration

Entertainers evaluating the terms of a contract.

Consideration is something of value given by a promissor to a promisee in exchange for something of value given by a promisee to a promissor. Typically, the thing of value is a payment, although it may be an act, or forbearance to act, when one is privileged to do so, such as an adult refraining from smoking. Consideration consists of a legal detriment and a bargain. A legal detriment is a promise to do something or refrain from doing something that you have the legal right to do, or voluntarily doing or refraining from doing something, in the context of an agreement. A bargain is something the promisor (the party making promise or offer) wants, usually being one of the legal detriments. The legal detriment and

bargain principles come together in consideration and create an exchange relationship, where both parties agree to exchange something that the other wishes to have. The purpose of consideration is to ensure that there is a present bargain, that the promises of the parties are reciprocally induced. The classic theory of consideration required that a promise be of detriment to the promissor or benefit to the promisee. This is no longer the case in the USA; typically, courts will look to a bargained-for exchange, rather than making inquiries into whether an individual was subject to a detriment or not. The emphasis is on the bargaining process, not an inquiry into the relative value of consideration. This principle was articulated in Hamer v. Sidway. Yet in cases of ambiguity, courts will occasionally turn to the common law benefit/detriment analysis to aid in the determination of the

enforceability of a contract.
[edit]Sufficiency Consideration must be sufficient, but courts will not weigh the adequacy of consideration. For instance, agreeing to sell a car for a penny may constitute a binding contract.[14] All that must be shown is that the seller actually wanted the penny. This is known as the peppercorn rule. Otherwise, depending the jurisdiction, the penny would constitute legally insufficient nominal consideration. Parties may do this for tax purposes, attempting to disguise gift transactions as contracts. Consideration is "sufficient" if it meets the test of law, whereas "adequacy" would require an additional

and subjective element of fairness or equivalence.

Transfer of money is typically recognized as an example of sufficient consideration, but in some cases it will not suffice, for example, when one party agrees to make partial payment of a debt in exchange for being released from the full amount.[15] Past consideration is not sufficient. Indeed, it is an oxymoron. For instance, in Eastwood v. Kenyon,[16] the guardian of a young girl obtained a loan to educate the girl and to improve her marriage prospects. After her marriage, her husband promised to pay off the loan. It was held that the guardian could not enforce the promise because taking out the loan to raise and educate the girl was past considerationit was completed before the husband promised to repay it. The insufficiency of past consideration is related to the preexisting duty rule. The classic instance is Stilk v. Myrick,[17] in which a captain's promise to divide the wages of two deserters among the remaining crew if they would sail home from the Baltic short-handed, was found unenforceable on the grounds that the crew were already contracted to sail the ship through all perils of the sea. The preexisting duty rule also extends beyond an underlying contract. It would not constitute sufficient consideration for a party to promise to refrain from committing a tort or crime, for example.[18] However, a promise from A to do something for B if B will perform a contractual obligation B owes to C,

will be enforceable - B is suffering a legal detriment by making his performance of his contract with A enforceable by C as well as by A.[19] Consideration must move from the promisee. For instance, it is good consideration for person A to pay person C in return for services rendered by person B. If there are joint promisees, then consideration need only to move from one of the promisees. [edit]Other jurisdictions Roman law-based systems[20] (including Scotland) do not require consideration, and some commentators consider it unnecessarythe requirement of intent by both parties to create legal relations by both parties performs the same function under contract. The reason that both exist in common law jurisdictions is thought by leading scholars to be the result of the combining by 19th century judges of two distinct threads: first the consideration requirement was at the heart of the action of assumpsit, which had grown up in the Middle Ages and remained the normal action for breach of a simple contract in England & Wales until 1884, when the old forms of action were abolished; secondly, the notion of agreement between two or more parties as being the essential legal and moral foundation of contract in all legal systems, promoted by the 18th century French writer Pothier in his Traite des Obligations, much read (especially after translation into English in 1805) by English judges and jurists. The latter chimed well with the fashionable will theories of the time, especially John Stuart Mill's influential ideas on free will, and got grafted on to the traditional common law requirement for consideration to ground an action in assumpsit.[21] Civil law systems take the approach that an exchange of promises, or a concurrence of wills alone, rather than an exchange in valuable rights is the correct basis. So if you promised to give me a book, and I accepted your offer without giving anything in return, I would have a legal right to the book and you could not change your mind about giving me it as a gift. However, in common law systems the concept of culpa in contrahendo, a form of 'estoppel', is increasingly used to create obligations during pre-contractual negotiations.[22] Estoppel is an equitable doctrine that provides for the creation of legal obligations if a party has given another an assurance and the other has relied on the assurance to his detriment. A number of commentators have suggested that consideration be abandoned, and estoppel be used to replace it as a

basis for contracts.[23] However, legislation, rather than judicial development, has been touted as the only
way to remove this entrenched common law doctrine. Lord Justice Denning famously stated that "The doctrine of consideration is too firmly fixed to be overthrown by a side-wind."[24] http://en.wikipedia.org/wiki/Contract Or in other word A contract is a legally enforceable promise A contract can be written or oral Contracts for the sale of goods over $500 Contracts for the sale of real property

Contracts that are incapable of being performed within 1 year, Promises to answer for or discharge the debts of another (Guarantee) Contracts can have many names and stay in other form such as: Contract Agreement Purchase Order Memorandum of Understanding Terms and Conditions Appointment Letter

Handbook (implied contract)

License Ticket A contract has 4 elements: Offer Acceptance Consideration Mutuality

Offer: A proposal to do a thing or pay an amount, usually accompanied by an expected acceptance, counter-offer, return promise or act The offeror is the master of his offer. An offer need not be made to a specific person. It may be made to a person, a class of people, or to the whole world. An offer is a definite promise to be bound, provided the terms of the offer are accepted. This means that there must be acceptance of precisely what has been offered Acceptance: Acceptance occurs when the party answering the offer agrees to the offer by way of a

statement or an act. Acceptance must be unequivocal and communicated to the offeror: the law will not
deem a person to have accepted an offer merely because they have not expressly rejected it.Compliance by the offer with terms and conditions of an offer A manifestation of assent to terms of offer in a manner invited or required by the offer The offer and acceptance must match (mutuality more on this soon) Does not necessarily occur only by signature of a contract Acceptance can occur by: *Action - using goods -opening the package (software)

-entering an establishment or participating in *Inaction not returning goods

an activity

Sometimes acceptance does not appear voluntary, but it is still sufficient Contracts of Adhesion: -- Take it or leave it terms -- Not bargained for Consideration: Something of legal value; anything that induces you to give up something May be something other than money (i.e., a promise to do something; a promise to refrain from doing something), Consideration is the price paid for the promise of the other party. The price must be something of value, although it need not be money. Consideration may be some right, interest or benefit going to one party or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other party.

So long as consideration exists, the court will not question its adequacy, provided that it is of some value. For example, the promise to pay a peppercorn in return for the lease of a house would be good consideration. Of course, the consideration must not be illegal or impossible to perform.

There is an exception to the rule: documents under seal (deeds) do not require consideration for there to be a binding contract. The value of a contract: Its not only what the University receives or pays, but also: What the University agrees NOT to do : - confidentiality clauses - non-compete clauses What risks and liabilities the University is exposed to

Mutuality: A meeting of the minds with respect to material contract terms A signature is deemed to be sufficient to evidence this requirement Therefore, it is crucial that you read carefully and understand all of the terms of a contract before you sign it

Application to Mays case.

In May situation, If she want to make a bussiness with a company she need to do a contract. In order to make a contract there are 4 keys elements which a contract must contain in order to be valid and enforceable by the law which are offer, consideration, acceptant, mutuality. Firstly the agreement which is determined by the rules of offer and acceptance. It must contain the offer which is a defined promise to be bound on specific term and acceptance which is unqualified agreement to the terms of the offer . With first element offer. May needs to find out a company this match with her company condittions. This means Brit Ltd must make an offer and the other party must accept that offer. There are some interesting things to note here. As a customer, in fact, May should makes the offer

to the party that she attent to buy deal with. For example, if you want to buy somethings in a
market, you have to ask for it, the goods does not come naturely. Go along with offer is acceptance. Another interesting fact is that if May sends an offer to other parties, they need to accept to may a valid contract. In May case, May need to communicate to any person before they accept the terms of the contract. After the contract has been made, May or the other company cannot unilaterally impose additional terms. For instance, if Brit Ltd if Brit Ltd. do not want their products orderd have nylon fibers.They must notify the other party and add it to the contract. "Consideration" is the second half of the bargain. If May offer to buy 1000 dresses for $30,000, then the $30,000 is the "consideration". It is often the price paid. It is important to note that consideration does not have to be adequate to form a binding contract. A contract to sell a Gucci bag for $1 is a valid and legally binding contract. A mere promise is not legally binding. For example, if the party that May willing to contract with promise to repair all Brit Lted products for free, there is no contract as I do get anything for promising to do the repairs. There is no consideration. However, there is one big exception to this rule. If the promise is made in a written document called a "deed", then the promise to do something for free is legally binding. Mutuality seem to be the last step of making of a contract. all the parties meet togerther and discuss the terms of the contract, when all parties are satisfied they will use sign in the contrace as

proof of collaboration.

Discuss the impact of different types of contract to May by providing explanations on comparison with face to face and distance selling modes (1.2)

In this part May will be shown the purpose of a contract is to establish the agreement that the parties have made and to fix their rights and duties in accordance with that agreement. The courts must enforce a valid contract as it is made, unless there are grounds that bar its enforcement. Statutes prescribe and restrict the terms of a contract where the general public is affected. The terms of an insurance contract that protect a common carrier are controlled by statute in order to safeguard the public by guaranteeing that there will be financial resources available in the event of an accident.

Types of contract

Contracts under Seal Traditionally, a contract was an enforceable legal document only if it was stamped
with a seal. The seal represented that the parties intended the agreement to entail legal consequences. No legal benefit or detriment to any party was required, as the seal was a symbol of the solemn acceptance of the legal effect and consequences of the agreement. In the past, all contracts were required to be under seal in order to be valid, but the seal has lost some or all of its effect by statute in many jurisdictions. Recognition by the courts of informal contracts, such as implied contracts, has also diminished the importance and employment of formal contracts under seal. Express Contracts In an express contract, the parties state the terms, either orally or in writing, at the time of its formation. There is a definite written or oral offer that is accepted by the offeree (i.e., the person to whom the offer is made) in a manner that explicitly demonstrates consent to its terms. Implied Contracts Although contracts that are implied in fact and contracts implied in law are both called implied contracts, a true implied contract consists of obligations arising from a mutual agreement and intent to promise, which have not been expressed in words. It is misleading to label as an implied contract one that is implied in law because a contract implied in law lacks the requisites of a true contract. The term quasi-contract is a more accurate designation of contracts implied in law. Implied contracts are as binding as express contracts. An implied contract depends on substance for its existence; therefore, for an implied contract to arise, there must be some act or conduct of a party, in order for them to be bound. A contract implied in fact is not expressed by the parties but, rather, suggested from facts and

circumstances that indicate a mutual intention to contract. Circumstances exist that, according to the
ordinary course of dealing and common understanding, demonstrate such an intent that is sufficient to support a finding of an implied contract. Contracts implied in fact do not arise contrary to either the law or the express declaration of the parties. Contracts implied in law (quasi-contracts) are distinguishable in that they are not predicated on the assent of the parties, but, rather, exist regardless of assent. The implication of a mutual agreement must be a reasonable deduction from all of the circumstances and relations that contemplate parties when they enter into the contract or which are necessary to effectuate

their intention. No implied promise will exist where the relations between the parties prevent the inference of a contract. A contract will not be implied where it would result in inequity or harm. Where doubt and divergence exist in the minds of the parties, the court may not infer a contractual relation-ship. If, after an agreement expires, the parties continue to perform according to its terms, an implication arises that they have mutually assented to a new contract that contains the same provisions as the old agreement. A contract implied in fact, which is inferred from the circumstances, is a true contract, whereas a contract implied in law is actually an obligation imposed by law and treated as a contract only for the purposes of

a remedy. With respect to contracts implied in fact, the contract defines the duty; in the case of quasicontracts, the duty defines and imposes the agreement upon the parties. Executed and Executory Contracts An executed contract is one in which nothing remains to be done by either party. The phrase is, to a certain extent, a misnomer because the completion of performances by the parties signifies that a contract no longer exists. An executory contract is one in which some future act or obligation remains to be performed according to its terms. Bilateral and Unilateral Contracts The exchange of mutual, reciprocal promises between entities that entails the performance of an act, or forbearance from the performance of an act, with respect to each party, is a Bilateral Contract. A bilateral contract is sometimes called a two-sided contract because of the

two promises that constitute it. The promise that one party makes constitutes sufficient consideration (see
discussion below) for the promise made by the other. A unilateral contract involves a promise that is made by only one party. The offeror (i.e., a person who makes a proposal) promises to do a certain thing if the offeree performs a requested act that he or she knows is the basis of a legally enforceable contract. The performance constitutes an acceptance of the offer, and the contract then becomes executed. Acceptance of the offer may be revoked, however, until the performance has been completed. This is a one-sided type of contract because only the offeror, who makes the promise, will be legally bound. The offeree may act as requested, or may refrain from acting, but may not be sued for failing to perform, or even for abandoning performance once it has begun,

because he or she did not make any promises.

Unconscionable Contracts An Unconscionable contract is one that is unjust or unduly one-sided in favor of the party who has the superior bargaining power. The adjective unconscionable implies an affront to fairness and decency. An unconscionable contract is one that no mentally competent person would accept and that no fair and honest person would enter into. Courts find that unconscionable contracts usually result from the exploitation of consumers who are poorly educated, impoverished, and unable to shop around for the best price available in the competitive marketplace.

The majority of unconscionable contracts occur in consumer transactions. Contractual provisions that indicate gross one-sidedness in favor of the seller include limiting damages or the rights of the purchaser to seek court relief against the seller, or disclaiming a Warranty (i.e., a statement of fact concerning the nature or caliber of goods sold the seller, given in order to induce the sale, and relied upon by the purchaser). Unconscionability is ascertained by examining the circumstances of the parties when the contract was made. This doctrine is applied only where it would be an affront to the integrity of the judicial system to enforce such a contract.

Adhesion Contracts Adhesion contracts are those that are drafted by the party who has the greater
bargaining advantage, providing the weaker party with only the opportunity to adhere to (i.e., to accept) the contract or to reject it. (These types of contract are often described by the saying "Take it or leave it.") They are frequently employed because most businesses could not transact business if it were necessary to negotiate all of the terms of every contract. Not all adhesion contracts are unconscionable, as the terms of such contracts do not necessarily exploit the party who assents to the contract. Courts, however, often refuse to enforce contracts of adhesion on the grounds that a true meeting of the minds never existed, or that there was no acceptance of the offer because the purchaser actually had no choice in the bargain. Aleatory Contracts An aleatory contract is a mutual agreement the effects of which are triggered by the occurrence of an uncertain event. In this type of contract, one or both parties assume risk. A fire insurance policy is a form of aleatory contract, as an insured will not receive the proceeds of the policy unless a fire occurs, an event that is uncertain to occur. Void and Voidable Contracts Contracts can be either void or Voidable. A void contract imposes no legal rights or obligations upon the parties and is not enforceable by a court. It is, in effect, no contract at all. A voidable contract is a legally enforceable agreement, but it may be treated as never having been binding on a party who was suffering from some legal disability or who was a victim of fraud at the time of its execution. The contract is not void unless or until the party chooses to treat it as such by opposing its enforcement. A voidable contract may be ratified either expressly or impliedly by the party who has the

right to avoid it. An express ratification occurs when that party who has become legally competent to act
declares that he or she accepts the terms and obligations of the contract. An implied ratification occurs when the party, by his or her conduct, manifests an intent to ratify a contract, such as by performing according to its terms. Ratification of a contract entails the same elements as formation of a new contract. There must be intent and complete knowledge of all material facts and circumstances. Oral Acknowledgment of a contract and a promise to perform constitute sufficient ratification. The party who was legally competent at the time that a voidable contract was signed may not, however, assert its voidable nature to escape the enforcement of its terms.

http://legal-dictionary.thefreedictionary.com/Types+of+Contracts Comparision between face to face and distance selling mode. Face to face selling mode Face to face selling is one of the most productive and most popular sales techniques. Being face to face with the customer allows the sales person to use a variety of sales strategies and to build a relationship with the customer in a way that they wouldn't be able to if they were using another method of selling. Distance selling mode There are contracts where the supplier and the consumer are not dealing face to face which have exclusive use of distance communication. Therefore, this sort of contracts is called distance selling. Distance communication would include web pages; unaddressed or addressed printed matter (this could include leaflets dropped through letter boxes); letters; press advertising with order forms; catalogues; telephone with or without human intervention; email; fax; and television (teleshopping). Having many types of distance methods encourage consumers to do shopping easy and quickly.



In a face to face selling situation, the consumer has the ability to see how you react to their questions, and to tell if you are truly confident in what you are selling. It takes a truly gifted sales person to be able to show confidence even when they are not confident in what they are selling. It is because of this, that a consumer generally has the advantage in a face to face meeting, but this doesn't mean that a sales person can't make the most of the situation.
While the consumer may have the advantage, because they can see every reaction that you make to their questions, you have the advantage in creating a deal. You can build trust by showing your personality, which will aid in making you much more confident. As a sales person you need to get the consumer excited about a product and

The methods of distance selling are tools for the sellers to break down the geographical barriers and reach the global community of buyers. It is not necessary to establish branches, companies or other entities in their target countries. It can be done by a single point-of-contact. It makes making things time-efficient and simple. There is no mediatory party (example broker, wholesale retailer) involved between the buyer and the seller. It is convenient of finding products and time spent on shopping. Consumers are free to spend time as much as they want deciding the right product before they buy. Further, with less effort, consumers can compare product features, prices to make a better decision. Consumers can buy goods and service from their home without the hassle of finding a parking space.


show them that you aren't just a sales person. You have to show them that you are a person outside of sales. If they have kids, tell them about your kids, share information with them as they share it with you. By doing this, you are giving them a piece of you, while keeping them away from questions that could potentially damage your sale. With this level of trust built up, even if you don't seem as confident as they would like, they may just equate this to being nervous or new. Because of this, they may discount this lack of confidence and let your personality take over, because you were able to gain their trust. Expensive Direct selling is relatively expensive compared to other forms of marketing. Each direct sales call can cost over $300 in some industries, according to "Know This" online, a reputable business reference site. Companies that sell directly must hire sales reps. Hence, the sales reps' salaries and benefits must be factored into the costs of all sales appointments. Sales reps must also be trained in classrooms and on the job before they can even call on customers. These training programs often last several weeks, which can get expensive. Sales reps also incur expenses traveling by air or car as not all customers are local. Time Consuming Sales calls can be time consuming. A sales rep may spend an hour or more introducing the features and benefits of her products. During this process, she may need to ask questions, overcome objections and try to close the sale. Moreover, reps may take several visits or calls to actually make sales. Some

there is lack of human interaction. Buying from a local retailer gives purchasers a certain confidence. Consumer knows the brand, the shop and the staff. When a person enters a store and can ask for advice, gain information, and interact with a human being. Enjoyment of doing shopping with others and making social connections will be lost when doing distance shopping. There is less reliability. Some people will not trust the distance shopping because transaction does not happen face to face. Moreover, there is a significant delay in receiving the ordered goods. This is not suitable for perishable commodities like food items. Consumers prefer to shop in the conventional way for purchasing food products. However, in case if the customer is not satisfied with the ordered product, returning the product and getting a refund can be even more trouble and time consuming than purchasing the product. Moreover, there might be hidden fees in methods of distance selling, and can be dishonestly priced and overinflated.

consumer or business clients need to think about their purchasing decisions. Also, the decision maker or owner may not even be available at the time of the sales call. Sales reps can only make one sale at a time. Contrarily, an online marketer may receive several sales in the same time period. Limited Coverage Small companies have limited coverage when they sell to clients directly. In other words, they can only cover one or more markets at a time, depending on the number of sales reps they employ. For example, yellow pages sales reps may spend 3 to 6 weeks in one market to visit all advertisers. They may then move on to a contiguous market and complete coverage for the next directory. Contrarily, companies using advertising or online sales methods can cover entire regions or the national market with single promotions. http://smallbusiness.chron.com/disadvantages-direct-selling-23209.html

Brit Ltd is a trading company based in the form of online sales is one way distance selling, online sales more and more popular by the development of the internet. Brit Ltd. can easily introduce their products to millions of people online every day, this method significantly reduces the cost of stores and warehouses. Also Brit Ltd also advertise their website easier and cheaper. Processing customer payments can be tricky for online businesses. Some customers refuse to make online payments at all because of the danger that hackers may steal their credit card numbers. No matter how friendly you are an an email, Internet

customer service can never match the intimacy of face-to-face interactions. It is easy for email recipients
to misunderstand your tone, complicating business relationships. In addition, online communication rarely provides you with the opportunity to build the kind of customer relationships that are possible when you can look customers in the eye and gauge their needs and their level of satisfaction.

Analyse terms in contracts with reference to their meaning and effect by providing examples in relation to dresses for condition, warranty, innominate terms and exclusion clauses (1.3)

We will give the definition of the condition, warranty, innominate terms and exclusion clauses, then evaluate and make specific analysis based on given situations. Contractual Terms The main body of a contract is its terms. The terms must be incorporated into the contract whether that is

by them being written terms, implied into the contract by trade custom or whether one party makes a
representation to the other party where it is clear that the other party treats the representation to be of great importance. There are also other ways that terms can be incorporated into a contract. Terms can be divided into conditions, warranties and intermediate terms. Conditions Conditions are terms which are of such importance that if one party breaches that term (known as a repudiatory breach) the other party has the right to rescind the contract (accept repudiation). In other words the party not in breach could elect to treat the contract at an end and would no longer have to

perform its obligations. At the same time that party could seek damages from the party in breach. Care
must be taken to communicate acceptance of the repudiatory breach in case it is otherwise deemed that the party has waived its right to rescind. The party not in breach does not have to rescind the contract but can elect to affirm the contract. By doing so it waives its right to accept repudiation and cannot at a later date treat the contract as at an end due to the other party's repudiatory breach. Where the party not in breach chooses to affirm the contract, it is still entitled to damages for breach. Warranties Warranties are those terms which are not serious enough for breach to be a repudiatory breach. The party not in breach can only recover damages. Intermediate Terms Intermediate (or innominate) terms are neither conditions nor warranties. Whether a breach of an intermediate term is a repudiatory breach is a question of fact. If the breach is serious enough then it will be a repudiatory breach, otherwise it will not be.

Exclusion Clauses One particularly important type of term is the exclusion clause. These are clauses that purport to exclude liability for breach. There are statutory rules as to the extent of such clauses and these are to be found in the Unfair Contract Terms Act 1977 (UCTA). There are also rules in the common law, such as the rule that exclusion clauses will be construed against the party seeking to rely on them (contra proferentem rule). Exclusion clauses should be contrasted with limitation clauses which seek to limit liability. The Courts have tended to be less harsh with such clauses. The Unfair Terms in Consumer Contracts Regulations 1999 apply, with certain exceptions, to unfair terms in contracts concluded between a consumer and a seller or supplier. The Regulations provide that an unfair term is one which has not been individually negotiated and which, contrary to the requirement of good faith, causes a significant imbalance in the parties' rights and obligations under the contract to the detriment of the consumer. Policing the Contract There are various factors that need to be considered in deciding whether a contract is void and therefore unenforceable or voidable which allows a party to treat the contract as void. It should be considered

whether there has been a misrepresentation of facts made by any of the contracting parties. It should also
be considered whether any of the contracting parties entered into the contract under a mistaken belief as to the subject matter of the contract. Was the contract tainted by illegality? Was there a question as to the capacity of any contracting party to enter into a contract? Did any of the contracting parties enter into the contract as a result of undue influence?

There is no general duty on a contracting party to disclose all material facts to the other party. The doctrines of misrepresentation and undue influence, in the context of fraud rather than contract, are

considered in the chapter on the law relating to fraud.

Remedies for Breach of Contract There are two principal remedies for breach of contract. They are: damages; injunctions for specific performance.

Damages are awarded on the basis that they should put the party not in breach in the position that it would have been in had the contract been properly performed. The level of damages is limited to natural consequences of the breach and consequences that are in the contemplation of the parties. These are both questions of fact. Specific performance is a remedy available in many actions for the sale of land. This is because by its very nature a parcel of land is unique. However it must always be remembered when seeking an equitable remedy that the equitable maxims apply. Gaming Contracts and Bills of Exchange Gaming contracts are unenforceable at law as a matter of public policy. However it is still possible for a casino to enforce payment by a gambler defaulting on payment of its gambling debts. The gambler pays for chips in order to gamble. Usually this will be by cash or cheque. If the gambler defaults on a cheque then the casino has a remedy as there is in general no defence to a bill of exchange not being honoured, regardless of whether the defaulting party has a counterclaim with which to set off the debt. Innominate terms are terms that lie in limbo. If the innominate term is an important one (ie. like a condition), the innocent party may terminate the contract, and obtain other remedies. However, if it is read to be a minor term (ie. warranty), the innocent party may not terminate. http://legal.practitioner.com/regulation/standards_7_1_6.htm for example May requires her partners 1000 dress, the relevant conditions in the contract can occur as following: Conditions are terms that the parties consider so important that it must be performed. If a party fails to perform a condition, the other party is entitled to treat the contract as at an end. Once the breach of a condition has been established, the innocent party may choose to either:

Terminate the contract and sue for damages, or

Affirm the contract and sue for damages and pursue other remedies like injunctions or specific performance. For instance, in a contract for selling dresses, one such condition could be expressly stipulated by the parties,. Some wrong about orgin of product occurs. The dress should have belonged to Dolce and Gabana summer 2012 collection but when Brit Ltd delivers the products to customer it is a counterfeit product of one company is headquartered in Shanghai, the customer may choose to Regard this as a Breach of an essential condition and sue the seller for Damages he has suffered, or even terminate the

contract. to utilise subpar replacement parts, the customer may choose to regard this as a breach of an essential condition and sue the seller for damages he has suffered, or even terminate the contract. Warranties term: For example, Brit Ltd products come with warranties under which the manufacturer will repair or replace any product that fails during the warranty period; the commitment to repair or replace being the warranty. (dress color fading after the first wash) Innominate term Brit Ltd hired a ship to transport their products.A ship was Chartered to the defendants for a 5 year period.However, after two years of operation, machinery degraded boat can not continue to operate.so Brit Ltd terminated the contract. An exclusion clause is a clause in a contract which excuses a party to the contract of liability in situations covered by the exclusion clause. This type of term in a contract can be illegal in certain settings, while in other cases, it may be in common and widespread use. If a contract has exclusion clauses, it is important to get familiar with them before signing and to contest them, if necessary, before agreeing to the contract. For example After customers buy D & G dress from Brit Ltd by purchased online.Desipe the dress still has 3 months until out of warranty that given by Brit Ltd. for customers before buying the dress.But customer accidentally spill paint on the dress.under exclusion clause term, brit Ltd. will not be responsible for this dress

Case 1
May, while in UK, called for a tender to a specific design for a dress in the year 2011. After receiving a number of tenders, May, entered into a contract with Jim (represents Neovision JSC manufacturer in Vietnam) under which Jim agreed to make dresses during the year 2011 'as and when required'. The agreement contained the following provisions: 1. It is agreed between the parties that in return for executing this agreement Brit Ltd will call upon

any other dress manufacturer in Vietnam during the year 2011. 2. It is agreed that no undertaking as to quality is given by Jim (representing Neovision) and no

compensation shall be payable in respect of the suitability or otherwise of the dresses to be manufactured. May ordered four batches. She paid for the first three quarter. In the fourth quarter, however the batch was proved unsatisfactory as it contained some colour difference in the fabric. May said to Jim that she would not be wanting any more unless they could rectifier the situation within one week after the order. Immediately after rejecting the forth-quarter order, May seek another supplier in Vietnam, who had indicated that they would supply the dresses at 10% cheaper. Case 2

ICL, large computer software multinational, was to supply a computer software system for administration including charges and supply chain set-up for May in Vietnam in 2011. The software was defective causing the inability to track and collect full payments. The supply contract however contains a clause limiting the liability for ICL to 100,000. May calculate the loss was close to 1M. It is also known that ICL has a world wide liability software insurance of 50M.

Apply the elements of contract in the 1st case business scenarios


In this section I will present the evaluation and analysis of the situation based on the elements of the

contract (offer, acceptance. consideration, mutuality). Based on what is given in the scenario, we can see
two representatives of the two parties: May (Brit Ltd.) and Jim (Represents Neovision JSC manufacturer in Vietnam), the two sides have agreed and signed the contract,therefore the contract has the 4 basic elements necessary. Offer: May offered for bidding on the design for one dress. It is a demonstration of willingness to enter into a bargain, made so that another party is justified in understanding that his or her assent to the bargain is invited and will conclude it. Any offer must consist of a statement of present intent to enter a contract; a definite proposal that is certain in its terms; and communication of the offer to the identified, prospective offeree. If any of these elements are missing, there is no offer to form the basis of a contract. and after considered Jim representing for Neovision company was chosen to get in the contract. Acceptance: Acceptance of an offer is an expression of assent to its terms, An acceptance is valid only if the offeree knows of the offer; the offeree manifests an intention to accept; the acceptance is unequivocal and unconditional; and the acceptance is manifested according to the terms of the offer. Jim attended the tender organized by the May preset for Brit Ltd organized, which means that Neovison volunted and accepted this contract in the begining.After considering from other tenders, Jim has been selected, this represents M ay also accepts Jim will be their business partners in the contract. Considerasion: when making contract Jim and May gave the agreement to two constraints together. 1. It is agreed between the parties that in return for executing this agreement Brit Ltd will call upon

any other dress manufacturer in Vietnam during the year 2011.

(Ths agreement was made to protect Brit Ltd in case Neovision dose not have ability to complete the contract, May still be able to find another company representative to finish the job from previous) 2. It is agreed that no undertaking as to quality is given by Jim (representing Neovision) and no compensation shall be payable in respect of the suitability or otherwise of the dresses to be manufactured. (This could be a flaw in the agreement of the two companies, however, this may brings to Neovision an advantage. They will not be responsible for errors on their products)

Mutuality: Where promises constitute the consideration in a bilateral contract, they must be mutually binding. This concept is known as mutuality of obligation. If one party's promise does not actually bind him or hers to some performance or forbearance, it is an illusory promise, and there is no enforceable contract. The expectation that the standards and agreements within a contract made between two parties is either upheld or rejected by both parties. One party cannot expect to have different rules or standards than another held in contract with it. In this case, Jim and May already have one of mutuality plan such as May ordered four batches but she only paid for the first three quarter.

Analyse and evaluate the effect of different the law on terms in the above two different contracts (2.2) (2.3)
Case 1

Case 2 ICL, large computer software multinational, was to supply a computer software system for administration including charges and supply chain set-up for May in Vietnam in 2011. ICL is responsible for providing software and upgrades for May to financial management in 2011.

Evaluation both the contracts May represents for Brit Ltd are the buyer means to pay, in 1st case, May will pay when there is a deman from Brit Ltd for Neovison, in the second case by the ICL is a company providing pc software so May could have to pay recurring each cycle because clothes are disadvantages of repair products (fabric sewed is not able to recyle for other products) so Neovision were wisely in not taking responsibility for the defects.Meanwhile the software product can be repaired quickly, and to add credibility ICL are responsible for their products if the error was discovered



As and required contract or A zero-hour contract (or zero-hours contract) is a recent type of contract under which an employer does not guarantee the employee a fixed number of hours per week. Rather, the employee is expected to be on-call and receive compensation only for hours worked. It means May will ask Jim when Brit Ltd has any demans for Neovision In the scenario It is agreed that no undertaking as to quality is given by Jim (representing Neovision) and no compensation shall be payable in respect of the suitability or otherwise of the dresses to be manufactured

the losses caused by software ICL, ICL will be responsible for the damages and repair softwarethat


It is agreed between the parties that in return for executing this agreement Brit Ltd will call upon any other dress manufacturer in Vietnam during the year 2011

Eclusion clause

It is agreed between the parties that in return for executing this agreement Brit Ltd will call upon any other dress manufacturer in Vietnam during the year 2011

This is not clearly stated, but we can implicitly, Innominate term was mentioned in warraties.if ICL can not provide a full range of software features for May or May not be able to pay that ICL had previously set out in the contract both parties have the right to cancel the contract The supply contract however contains a clause limiting the liability for ICL to 100,000

in the 1st case innominate term is explicitly mentioned that May can call any other manufacturer apart from Neovision, case 2 innominate term is not specified, it proved to be a bound between Brit Ltd. and ICL in both cases Neovison and ICL are companies offering their products should have their exclusion clause to prevent risks in the production process.it is essential to avoid damage from unexpected incidents

In 1st Case because the contract says available on terms innominate term, so May can simply go find another manufacturer, but there are still other stuation occur, If Neovision accept the revised their products within a week and promise not to repeat the contract would remain in force.
In 2nd case bases on Third-party rights Privity of contract occurs only between the parties to the contract, most commonly contract of sale of goods or services. Horizontal privity arises when the benefits from a contract are to be given to a third party. Vertical privity involves a contract between two parties, with an independent contract between one of the parties and another individual or company. If a third party gets a benefit under a contract, it does not have the right to go against the parties to the contract beyond its entitlement to a benefit. An example of this occurs when a manufacturer sells a product to a distributor and the distributor sells the product to a retailer. The retailer then sells the product to a consumer. There is no privity of contract between the manufacturer and the consumer. This, however, does not mean that the parties do not have another form of action e.g. Donoghue v. Stevenson here a friend of Ms. Donoghue bought her a bottle of ginger beer, which was defective. Specifically, the ginger beer contained the partially decomposed remains of a snail. Since the contract was between her friend and the shop owner, Mrs. Donoghue could not sue under the contract, but it was established that the manufacturer has a duty of care owed to their consumers and she was awarded damages in tort.

Privity is the legal term for a close, mutual, or successive relationship to the same right of property or the power to enforce a promise or warranty.

May be able to sue ICL because of the damage they cause, even in the contract between Brit Ltd and Neovison only accept compensation 100,000 for the damage caused by ICL software.However, base on Privity of contract, May is entitled to compensation from the insurance company of the ICL.amount of damages the court will decide.

After this report, I have obtained valuable knowledge : the importance of the key essential elements required to the formation of a valid contract, Discuss the impact of different types of contract Be able to apply the elements of a business contract in business situation. Apply the elements of a contract in a given business scenarios, Apply the law on terms in different contracts, Evaluate the effect of different terms in given contracts. I understood some aspects of the law of contract and tort and the skill to apply them, particularly in business situations. - Understand the essential elements of a valid contract in a business context - Be able to apply the elements of a contract in business situations - Understand principles of liability in negligence in business activities - Be able to apply the principles of liability in negligence in business situations

Referrence list
[Blacks Law Dictionary, 6th ed. http://en.wikipedia.org/wiki/Contract http://legal-dictionary.thefreedictionary.com/Types+of+Contracts http://legal.practitioner.com/regulation/standards_7_1_6.htm http://legal.practitioner.com/regulation/standards_7_1_6.htm

Mr Anthonys Silde