ASPECTS OF CONTRACT AND NEGLIGENCE FOR BUSINESS

Contract Law
QFC level 4 : BTEC Higher National – H1

Contents TASK 1 2 1.1 Agreement, consideration, intention and capacity 2 Agreement 2 Consideration 2 Intention 3 1.2 Effects of the different types of contract 3 Void, voidable and unenforceable contract 3 Written 4 Electronic 4 Distance selling 4 1.3 Meaning and effect of terms: 4 Conditions, warranties and innominate terms 5 Exclusion clauses 5 2.1 How the essential elements of contract law apply in Scenario 1 5 2.2 How the law on terms applies in Scenarios 2 and 3 6 Scenario 2 6 Scenario 3 7 2.3 The importance of the different terms, stated and unstated 7 Implied terms (Scenario 2 & 3) 7 Express terms for Scenario 2 7 Express terms for Scenario 3 8 TASK 2 8 3.1 Describe 8 Liability in tort 8 Difference between liability in contract law and liability in tort 8 3.2 Negligently liable 8 3.3 Vicarious Liability 9 4.1 How the elements of the tort of negligence apply in scenario 4 9 4.2 How the law on vicarious liability applies in scenario 5 10 References 11

TASK 1 1.1 Agreement, consideration, intention and capacity
We all know that a contract is an agreement between two parties but what most people don’t know is what is needed for a contract to become legally binding. Jeremy Renals used how to start a fire as an example where he said that you need three elements to start a fire: fuel, oxygen and heat, therefore, for a contract to be legally binding , it also needs three elements such as: agreement, consideration, intention and capacity.
Agreement

Agreement is the first main element of a legally binding contract and is determined by the rules of offer and acceptance.
An offer is when someone gives a definite promise to be bound on specific terms and acceptance is the unqualified agreement to the terms of an offer, it can be by express words or by action. For example, if I present an offer to buy a product for the price of £500.00 I need to be able to pay the amount offered and the other party can accept the offer by taking the money and giving me the product.
The importance of offer and acceptance is that they define the terms under which both parties have agreed to be bound not allowing new terms to be introduced to the contract unless both parties agree.
Consideration

Consideration is the second main element of a legally binding contract where each party have to provide something that will contribute to the contract in some way.
Valid consideration can be executed or executory. Executed consideration is a performed act in return for a promise whereas executory consideration is a promise given for a promise not a performed act. For example, in an executed consideration if I offer a reward in return of an old book, my promise becomes binding when someone performs the act of bringing me an old book but in an executory consideration, someone promises to bring the old book and I promise to keep it until they do so.
Consideration is important because it allows a party to sue for breach of contract, for example, if anyone tells you they will clean your house for free, you won’t be able to sue them if they don’t, because you have not provided any consideration.
Intention

Intention is the final element that needs to be present. A contract is not legally binding unless both parties have the intention to create legal relations but also have the ability and capacity to do so.
For example, when you have an agreement to drive a friend to the airport, it means you try to make the other party’s wish but do not intent to be legally bound, therefore the law draws a distinction between social and domestic agreements and agreements made in a commercial context in order to determine which agreements are legally binding and have an intention to create legal relations.
Intention is an important element in a contract because it