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Aspect of Contract and Negligence

Individual Assignment

Acknowledgement
I would like to express my gratitude to Mr.Frank Gunasekara who gave me the possibility to complete this assignment and for the guidance and support they gave in preparation of this study. Especially, I would like to give my special thanks to my parents who enabled me to complete this work. However, it would not have been possible without the kind support and help from my friends. Last but not the least I would like to thank all our peers and staff at I.C.B.T and specially Mr.Dilum our coordinator who were ready to lend a hand in whatever way they can. I am making this project not only for marks but also to increase my knowledge. Thanks again to all who helped me.

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Aspect of Contract and Negligence

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Executive Summary
The reason of this study is to learn the basic legal principles for which we can use in the practical aspect of business. Also from the case studies which is given is very helpful for practical day to day issues. This study is focused on non-lawyers therefore we should give a clear picture of the concepts such as the contracts, negligence torts , breach of conditions etc. this is also helpful to understand and learn the legal terms used in business contracts. This study helped me to understand the key elements of a business contract, Tort of Negligence and also the consequences of breach, and also to apply the rules and laws for practical scenarios.

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Contents
Acknowledgement .................................................................................................................................. 1 Executive Summary ................................................................................................................................ 2 Introduction ............................................................................................................................................. 4 ................................................................................................................................................. 5 1.1 Simple contract ............................................................................................................................. 6 1.2 Contract under seal ....................................................................................................................... 6 1.3 Signature ....................................................................................................................................... 7 1.4 Unilateral contract ......................................................................................................................... 7 1.5 Bilateral contract ........................................................................................................................... 7 1.5 Multilateral contract ...................................................................................................................... 8 P1.1.2 .................................................................................................................................................. 8 Key Elements of a Valid Contract .................................................................................................. 8 P1.2. .................................................................................................................................................. 12 P1.3.1. ............................................................................................................................................... 12 P1.3.2. ............................................................................................................................................... 13 P1.4. .................................................................................................................................................. 13 ............................................................................................................................................... 14 P2.0 Definition of Consequence of the breach.................................................................................. 15 2.1.1 Consequence of the breach of condition .................................................................................. 15 P2.2 ................................................................................................................................................... 16 ............................................................................................................................................... 17 P3.1 ................................................................................................................................................... 18 P3.2 ................................................................................................................................................... 19 P3.3 ................................................................................................................................................... 19 P3.4 ................................................................................................................................................... 20 ............................................................................................................................................... 21 P4.1 ................................................................................................................................................... 22 P4.1.1 Proximity test ..................................................................................................................... 22 P4.1.2 Reasonable foresee ability test ........................................................................................... 22 P4.2 Defense for Negligence ........................................................................................................... 23 Conclusion ............................................................................................................................................ 24 Reference .............................................................................................................................................. 25

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Aspect of Contract and Negligence

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Introduction
In this era almost every person has some sort of a problem. Some people dont even know how to face certain situations but by knowing the rules and laws it is much easier to deal with issues. By having at least a basic knowledge of business law, no one can play around with people. Also the thinking pattern/angle of a person changes when rules and laws are understood clearly. In this study I have used some case studies to answer my questions and also to understand various kinds of situations. I have also got Donoghue vs. Stevenson case study which will also help to understand and to face certain situations and this will be needful for businesses as well.

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1.1 Simple contract

This is an agreement made by two individuals or two groups verbally; it can either be in written format such as land contracts or in oral form. Before anything can be enforced in the court there should be a good cause or motive even though these kind of contracts are entered without proper consideration of the subject. Lectric Law Library defines this as, The party making the promise must have obtained some advantage or the party to whom it is made must have sustained some injury or inconvenience in consequence of such promise; this rule has been established for the purpose of protecting weak and thoughtless persons from the consequences of rash, improvident, and inconsiderate engageinents. But it must be recollected this rule does not apply to promissory notes, bills of exchange or commercial papers.

1.2 Contract under seal

A contract under seal is also known as contracts performed as deeds, A contract under

seal should be in written format, which does not require deliberation to be an element of the
contract for it to be legally binding. But there must be a valid and clear purpose to create a contract under seal, and must be sealed and delivered.

Expert law defines this as, A contract under seal is considered a more formal contract. Generally, valuable consideration is necessary to make an enforceable contract but for a contract under seal, no consideration is necessary. Traditionally, such a contract carries with it an *irrebuttable presumption of consideration. (The phrase, "irrebuttable presumption of consideration" means that the person who owns the contract can expect to receive the stated value of the contract and that the contractor (whom ever signed the contract) will deliver the stated value according to the contract without argument.

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1.3 Signature A signature is a distinctive mark or a characteristic made for identity of a person. A signature differs from person to person, simply said unique. An individual signs on a document or some sort of a paper or dead to signify approval or obligation. This is also used to conclude a letter or when issuing a cheque. Legal dictionary defines this as, The term signature is generally understood to mean the signing of a written document with one's own hand. However, it is not critical that a signature actually be written by hand for it to be legally valid. It may, for example, be typewritten, engraved, or stamped. The purpose of a signature is to authenticate a writing, or provide notice of its source, and to bind the individual signing the writing by the provisions contained in the document.

1.4 Unilateral contract

Unilateral contract is when only one party or one group who is also known as the offeror promises in exchange for a performance by the other party or group who is also known as the offeree. If the offeree perform on the offeror's promise, then the offeror is legally committed to meet/satisfy the contract, but an offeree is not obliged to perform (or not perform), because a return promise has not been made to the offeror. After an offeree has performed, only one promise exists, that of the offeror. 1.5 Bilateral contract

In a bilateral contract both the parties makes an enforceable promise. The group which is making the promise is the promisor and other party is the promise. For an example, if someone offered to bring you lunch on Mondays and Tuesdays in exchange for your promise to return the favor on Wednesdays and Thursdays, a bilateral contract would be created binding both of the parties once you provided deliberation by accepting those terms. But if that same person offered to pay you Rs.100 every day you bring him/her lunch, a unilateral contract would be formed, binding only upon the promisor until you provided consideration by bringing lunch on a particular day.
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1.5 Multilateral contract

A multilateral contract is an agreement between two or more than two individuals, firms or agencies. This contract method is mostly used between several countries. Multilateral contracts have become tremendously important means for countries to solve vital problems in a way that establishes more common ground and solves real and potential points of difference. Multilateral contract frequently requires compound agreements necessary to resolve the differences between the various parties and bring them into agreement.

P1.1.2 Key Elements of a Valid Contract

Offer Agreement Acceptence Legal Relations Consideration

Elements of contract

Capacity

Consent

Legality

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1. Offer. An offer is a promise or process made by one group to another group to enter into a legally enforceable agreement, it maybe verbal, inferred by conduct or made in writing. It is called as an express offer. o Offeror: The person making an offer. o Offeree: The person who receives an offer from another party.

2. Acceptance. An offer should be accepted exactly as it is and the acceptance must be exactly in accordance with the terms of the offer. The acceptance is where the party, to whom the offer has been made, must agree to the offer unconditional to have a legally enforceable agreement it also may be verbal, inferred by conduct or made in writing.
Essentials of a valid acceptance Acceptance must be absolute and unqualified. Acceptance must be communicated. Acceptance must be according to the mode prescribed. Acceptance must be given within the time specified or before the due date. Acceptance must be in response to the offer. Acceptance must be given by the person to whom the offer is made.

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3. Consideration. Consideration is something of value which must pass between the parties to an agreement to make the agreement a valid and legally binding contract. Consideration is a most important part of a contract. This is some sort of a promise exchanging system where both parties will have to enjoy a benefit as well as a detriment. This benefit and the detriment is known as the consideration. Suppose a girl promise to give a boy her car, but the boy doesnt give the girl anything in return. If the girl breaks her promise and keeps her car, the boy cant then go to court and make the girl give it to the boy. Then the contract isnt legally binding: since the boy didnt give the girl any consideration for her promise. Rules of consideration Consideration need not be adequate. Consideration must be sufficient. Consideration must not be in the past. Consideration must move from the promise. Consideration is existing contractual and public duties. Consideration is a part payment of a debt is unenforceable unless.

4. Capacity of the Parties to Contract.

This is the ability for a party to enter into an agreement; a person entering into an agreement has a full or limited access to the agreement. There are several rules that exist for certain groups such as, Minors. Drunkards. Mentally disordered.

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5. Intent of the Parties to Contract. This is a mental attitude in which a person acts. It has been stated by the courts that there can be no agreement unless every party involved intended to enter into one. Edilex defines intent as, Many contracts contain a provision stating that it represents the full and entire agreement between the parties and that it has precedence over any oral or written agreement reached prior to its signing. This provision, much like section 2863 CCQ, prevents any claim by either of the party to the contract that the latter does not accurately reflect the parties intent. Although this provision generally produce such an effect, the Court of Appeal of Quebec recently issued a ruling reminding us that even a written document which seems to clearly state the intent of the parties can successfully be contradicted by a party to such contract.

6. Object of the Contract. The object of contract must be lawful (Object should not be) Illegal Immoral Opposed to public policy

US legal defines object of the contract as, Objective theory of contract is a doctrine which states that a contract is not an agreement in the sense of a subjective meeting of the minds. However, a contract is instead a series of external acts giving the objective semblance of agreement. This principle states that the existence of a contract is determined by the legal significance of the external acts of a party to a purported agreement, and not by the actual intent of the parties. American law had adopted the objective theory by the late nineteenth century. This doctrine is often shortened to and known as objective theory.

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P1.2. Question: On 4th January Kera makes Liam an offer by letter. On 09th January Liam writes accepting the offer on 10th January Liam sends Kera a fax, have changed my mind. Ignore letter of 09th". Having received the fax, Kera sells the goods to Max on 11th Jan. On 12th January Liam's Letter arrives. That afternoon Liam telephones Kera to tell her he now wishes to proceed. Advice Kera.

Answer: According to the postal rule the letter has been accepted on the 9th of January. At the movement of the post it becomes accepted. Further the fax may not be considered as invalidated. To have an acceptable solution there should be a contract but since this is only for the agreement stage there is no contract. It is necessary to prove the consideration in order to build dependability. There will be no contract if there is no consideration. Liam could not succeed against Kera.

P1.3.1. Question: Before they married, Frank Promised Gail a monthly allowance for her own use. They separated and Frank stopped payment. What are Gails rights? Would your answer be different if, following their separation, Frank had agreed to continue the payment as maintenance?

Answer: At the time Frank promised Gail they were not legally married. So according to the law, if they are not legally married then there will be no obligations or legal commitments created between them. Further Gail could not go against Frank since they were not married when he made the promise. So there is no legal obligation to maintain Gail.

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P1.3.2. Question: Stuart agreed to purchase 02 tons of copper tubing from Tim, to be delivered no later than 20 March. On 10th March, Stuart agreed to sell part of the order to Ulla. To ensure delivery, Ulla offered to pay Tim $100 if the tubing was delivered to Stuart by 20th March. Tim delivered it on 19th March and demanded the $100. Ulla refused to pay. Advice Tim. Answer: In this scenario, Stuart should pay money to Tim. According to the agreement between them Ulla agreed to pay $ 100 to Tim if he delivered the tubing by 20th march to Stuart. According to the law if a person does not execute his/her part of the contract by the given due date/time , that person will be liable for its breach. But in this scenario we can see that Tim performed his part of the contract on time or even before the due date. Therefore Tim has the right to sue Ulla for breach of promises.

P1.4. Question: Dan aged 17, marries and purchases two dresses on credit for his wife Erma. When the accounts arrive he refuses to pay. Advice the shopkeeper. Answer: In almost every country one that is below the age of 18 is underage is considered as a minor. A life which is before the completion of 21st year is known as infancy under the law. In this case Dan is under 18, a minor citizen cannot make a contract. But a minor can be a beneficiary. But taking law of contract in to account minors can be involved in a contract to fulfill their basic needs. The shopkeeper can sue Dan to pay the money, if not his wife shall pay for the dresses or they should return the items in the same conditions.

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P2.0 Definition of Consequence of the breach

2.1.1 Consequence of the breach of condition A condition is a major term of a contract which goes to the root of the contract. Breach of a condition makes the contract void. Not only has it made the other party entitled to sue for damages but also to terminate the contract. Furthermore the injured party has the power to decide on choosing either to affirm the contract and simply claim damages or proceed with the legal actions.

2.1.2 Consequence of the breach of warrantee A warrantee is known as a minor term in a contract. This is also a violation of an argument between a buyer and a seller. Furthermore in this case too the injured party has the power to decide on choosing either to affirm the contract and simply claim damages or proceed with the legal actions.

2.1.3 Consequence of the breach of Intermediate term Intermediate term is not a condition neither a warranty. If an intermediate term is violated, then the court will look into the seriousness of the breach/violation. If the breach is serious then it will be treated as a condition which will allow the innocent party/group to sue for damages and terminate the contract, whereas if the breach is insignificant then it will be treated as a warranty.

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P2.2 Question: Delma signed a document she did not read because her glasses had been broken. She was informed that it was a mortgage required to satisfy a finance company. In fact, it was a memorandum of transfer of her property to Eric, a rogue who proffered the document. Advice Delma. Answer: Delma has the responsibility to read the particular document before placing her signature. In a circumstance where she cannot read the document then she should request a responsible person to read out the document/contents. If what he got to hear was different to the content which is stated in the document then he may prosecute action against te company for cheating and file a case in the land registry soon as possible. P2.2 Question: Alma takes her expensive fur coat to Bens dry-cleaning establishment. She is handed a ticket, the face of which contains a number, her name, a description of the coat and an annotation to the effect that the coat will be ready the following Friday. On the reverse side in small print are the words: we will not be responsible for any loss or damage of whatever nature or howsoever caused. On Almas return the coat is badly torn. Advise her. Answer: Exclusion clauses are terms of a contract that seek to limit the liability of a loss caused to the plaintiff by the defendant. In this scenario the exemption clause is not valid because they did not give the ticket to Alma when she was handing over her coat. Usually it should be given before the money is handed over to Ben. Therefore we can conclude by saying that Ben is responsible for the damage caused to the coat.

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P3.1

This case in illustrated in the Donoghue vs. Stevanson case study. In that case we see Ms. Donoghues friend buying her a bottle of ginger beer where there was a decomposed remaining of a snail. Mrs. Donoghue had no direct or indirect claim against the manufacturer based on contractual obligations because she did not purchase the product. The ginger beer was contained in an opaque bottle that prevented the contents from being viewed clearly. Distinguishing contractual liability from tortious liability it can be clearly shown that where contractual liability has a concern about the original parties in to the contract, tortious liability concern the public at large and the moral and ethical responsibilities of a person towards the world at large. In case of a contract the duty is fixed by the parties and owed to definite persons whereas in tort, duty is fixed by the law and owed to the community at large. In a breach of a contract damages are only for the purpose of compensating but in tort compensation is the only remedy. In Tortious liability, a moral element, a mental element and public policies are greatly attached to the outcome of a case where in contractual liability it cannot be observed. Donoghue vs. Stevenson is an perfect example to illustrate the above analyzes and to arrive at the reasons behind the much criticized outcome of the case study.

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P3.2

As we can take Duty of occupier in to consideration the fireman can claims against the occupier if a firemen is injured. In this scenario a firemen is injured.
The Occupiers Liability Act 1957 deals with the issues in relation to occupiers liability. According

to the act visitors must be kept safe in the premises.


But as in this scenario when the fire is broken the firemen are called, and they are expected to guard themselves from special risks in accordance with his career and the occupier might not be liable for any damages since the firemen are skilled workers. Even though the fire was negligently caused the fireman was expected to behave like skilled worker who is performing his duty to extinguish the fire.

P3.3

In this case study A Ltd owns a number of nightclubs. B Co hired some bouncers for nightclub work. Kevin was hired for six months. A Ltd tells Kevin that under no circumstances must he drink while hes on duty or strike a customer unless he is attacked first. Theres an agreement between Kevin and A Ltd. A Ltd can also dismiss Kevin for any misconduct caused. But he gets drunk with a friend of his, and his friend starts to cause trouble and finally theres an argument between both of them and Kevins friend is seriously injured. According to the Act of customers they have to protect their customers. At this situation Kevins friend (C.C) who is also their customer is injured because of their employee. Between Kevin and C there is a Bridge of contract. In this case B.Co can sue Kevin with the law rules of bridge of contract. C cannot apply for claim with A Ltd or B Co. He can apply the claim with Kevin who injured C.

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P3.4

D and E are neighbors and they have had stalls in Meadow Lane for hundreds of years. F started a mobile stall in the same lane. F stall makes a smell and it overwhelms the bouquet of wines. E tries to sell her property since she has to reduce the price because of the smell. After that E asks F to move on and send a letter. F starts a fire to Ds hedge and it spread to Es property and it burnt down an outhouse. But F vows to continue selling chestnuts from the same place in the future.

In this case study because E has the stall in a public lane and not a private lane, E cannot send a letter in writing or a legal notice to F. According to the Statutory Nuisance, Parliament has declared certain activities nuisance by statute. They are usually part of public health reform and so prejudicial to health more than prejudicial to land, e.g. Clean Air Act 1956. ( F stall makes a smell to others) They provide a means of stopping nuisance and save the victim the cost and inconvenience of civil action.

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P4.1 P4.1.1 Proximity test

A test of proximity conducts a main part in assessing whether there is a duty of care owed to the injured party. In this it is determined whether there is a relationship of proximity between the
parties.

If we take Donoghue vs. Stevenson case study, there was no contractual relationship between Ms.Donoghue and the ginger beer manufacturer or even the owner of the cafe, as Ms.Donoghue had not ordered or paid for the drink herself directly.

Although there was a contractual relationship between the cafe owner and Ms.Donoghue's friend, the friend or the person who actually bought the drink had not been harmed by the ginger beer. As ginger beer was not a dangerous product, and the manufacturer had not fraudulently misrepresented it, the case also fell outside the scope of the established cases on product liability.

Therefore taking all these details in to consideration the law therefore did not provide a remedy for Ms.Donoghue.

P4.1.2 Reasonable foresee ability test

In negligence and nuisance the ability is the test to be applied in determining inaccessibility of damage. The defendant must foresee the type of damage for which the applicant seeks to make him/her liable. The defendant is also not liable if he/she could not foresee any harm. According to this rule if the defendant could foresee any psychological effect to the applicant then he/she will be held liable for all the psychological injuries that follows on account of the applicant's particularly weak pre-accident condition, even if it turns out that the injuries to the applicant were worse than might reasonably have been expected in normal conditions.
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P4.2 Defense for Negligence

Contributory Negligence The defendant attempts to deny the plaintiff the right to action by claiming that plaintiffs own negligence was a major influence on the injuries. In contributory negligence both the groups will be guilty of negligence but plaintiff will not be compensated. Once defense of contributory asserted it will be inferred that just as the defendant has the duty to reduce the amount of undue risk to others, the plaintiff has the duty to protect himself from possible harm. Contributory negligence includes the plaintiff's awareness of the knowledge of the situations he/she was in and for which he/she should have taken necessary steps. If in the slightest assumption of contributory negligence on the plaintiff's part it completely desolates his opportunities at action against the defendant.

Duty

Negligence

Breach

Damage

Causation

Remoteness

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Conclusion

The reason of this study is to learn the basic legal principles for which we can use in the practical aspect of business. From every case study faced it is easier to find solutions to the present situations and problems as every case study had a unique problem and a unique solution which is very important because there are so many situations that we can apply this knowledge to. At the end of this assignment I have a more vital knowledge about contract agreement and etc. which will help in my future. Even though we are non- lawyers we can manage our problems in business and other part of situations on our own up to some extent.

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Reference

Edilex defines intent, [Online], Available: http://www.edilex.com/edilexpress/index.php/the-primacy-of-the-intent-of-theparties-over-the-written-contract/#ixzz2EkpeWDgC [Accessed 8th December 2012]

Expert law defines contract under seal, [Online], Available: http://www.expertlaw.com/forums/showthread.php?t=39898[Accessed 7th December 2012]

Lectric Law Library defines simple contract, [Online], Available: http://www.lectlaw.com/def2/s157.htm [Accessed 6th December 2012]

Legal dictionary defines signature, [Online], Available: http://legal-dictionary.thefreedictionary.com/signature[Accessed 7th December 2012]

US legal defines object of the contract, [Online], Available: http://definitions.uslegal.com/o/objective-theory-of-contract/[Accessed 8th December 2012]

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