Aspect of Contract and Negligence

Department of Business studies
Aspect of contract and negligence
ICON College of Technology and Management

Faculty of Business and Management Studies
BTEC HND in Business
Coursework
Aspect of Contract and Negligence for Business
Tutor: Richard Ryder
Submitted by: Saddam Hassan

ID No: 10153
Student ID: 10153
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Session: July 2011
Student ID: 10153
Page 1 of 10
Contents
Question no 1 in page, 2-3
References in page 10
Question 1
Jack offered to purchase 50 units of product from Mary. Jack offered a price of 1000. Mary said that
she wished to supply the units but that the price would be 1200. Jack stated that he could not offered
to pay this much. Mary responded by saying that she would supply the units for 1000. Jack says that
he has changed his mind and doesnt want the product anymore. Advise Mary as to whether she can
force Jack to take the units for 1000.
Question 2
With the reference to case law, evaluate in what circumstances an advertisement might be considered
to be a unilateral offer.
Question 3
With reference to relevant case law, analyse when an employer will be held to be vicariously liable for
the actions of his employees.
Question 4
With reference to case law, explain how the courts have developed the concept of Duty of Care in the
context of bringing a claim in negligence.
Question 1
Student ID: 10153
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Introduction: This case includes offer, counter offer and acceptance.

1.1 Offer: According to Ewan Mckendrick (2003), an offer is a statement by one party of a
willingness to enter into a contract on the term that he has put forward. An offer must be clear,
certain and final. If not an offer than invitation to treat that cannot be accepted. The difference
between Gibson v Manchester City Council and Storer v Manchester City
Council cases seems to lie in the fact that in Mr Storers case, the Agreement for Sale had been
filled in with details of both the purchase price and the mortgage. In the case of Mr Gibson, no firm
offer of a mortgage had ever been forthcoming from the Council and it would seem unlikely that he
would have bound himself to the purchase without confirmation as to whether such a mortgage would
be forthcoming.
1.2 Counter offer: According to Ewan Macintyre (2005) Acceptance of an offer must be unqualified
and unconditional. A response which proposes a material alternation of the terms of the offer will
amount to a counter offer. In other word No mirror image and offeree change the terms of original
offer. Counter offer terminates original offer. In the case of Hyde v Wrench (1840) Wrench offered to
sell Hyde a farm at 1,000 but Hyde rejected it and made a counter-offer to buy it at 950. Wrench
rejected this counter-offer. After that Hyde made an acceptance of the first offer of wrench. But
wrench didnt sell the farm. The courts decision is that the counter-offer operated as a rejection of
the original offer. There was therefore no contract.
1.3 Acceptance: According to Ewan Mckendrick (2003), an acceptance is a final and unqualified
expression of assent to terms of an offer. Much match offer can be communicated to the offeror. In the
case of Felthouse v Bindley (1862)11 CB(NS); Felthouse offered to buy his nephews horse at 30 .
15s by sending a letter stated , If I hear no more about him, I consider the horse mine at 30 15s.
When his nephew was about to sell his farming stock to Bindley an auctioneer his nephew
instructed not to sell that horse. But Bindley sold it and Felthouse sue him for it. The courts decision
was It was an acceptance of an offer not a contract for sell. So there was no contract and Felthouse
had never won the horse as a property.
1.4 Discussion: In this case when the first offer took place Jack was thee offeror and Marry was the
offeree.Jack made an offer to purchase 50 units of products for 1000.At that time Marry had the right
to accept it or not. Because Marry was the offeree. According to law a contract cannot be made until
the offer is accepted by the offeree. She rejected jacks offer by saying that she wish to supply the
product but the price would be 1200.At that time the previous offer had been changed and it turned
into a counter offer. Now Marry become the offeror and Jack become the offeree.AS a offeree now
Jack has the to accept it or not. But when he rejected Marry, then she again offered Jack that she is
now agree with his first offer. In this offer Marry again becomes the offeror and Jack becomes the
offeree. Because she was the person who making an offer and Jack and Jack was the person to whom
the offer is made. At last when Jack finally rejected her she cannot force Jack to buy her products.
Due to law Jack has the right as an offeree; he can accept or reject any offer of offeror.
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Question 2
Introduction: Three things are compulsory to create a contract, an agreement (offer and acceptance),
an intention to create legal relations, and consideration. The statement outlining what amounts to an
offer. Statement made by an offeror to an offeree which must be clear, certain and final. Usually one
party must have to make the offer and the other party must have to accept it for making contract. Once
it accepted by the offeree a contract will usually be binding on both parties (offeror and offeree)
In general contract are two types:
1. Bilateral contract
2. Unilateral contract
Bilateral contract: This is the most popular form of contract. In this contract both parties take on an
obligation commonly by promising each other to do something. If one party promises to sell
something another party need to by this thing in exchange for payments. This contract must have a
mutual obligation.
Unilateral contract: In this case only one party assume an obligation under the contract. Here only
the offeror assume an obligation to make an offer to the offeree. But there is always possibility that
the offeree might be accepted the offer or not. The offeror cannot force the offeree to accept the offer.
But once the offeree acts on the offerors promise the offeree legally obligated to fulfil the contract.
Suppose I promise to give 100 to whom who will type my assignment for me. Here only I assume an
obligation to pay 100. Anyone can accept it or not. This is a unilateral contract. On the contrast in
this offer if I say Richard Ill give you 100 to type my assignment. This is a bilateral contract
because here both of us take on an obligation to do work for each other. If Richard accepted it and do
my work, then I need to pay him 100 because we promised each other.
If not an offer then it is an invitation to treat.
Invitation to treat: An offer needs to be differentiated from an invitation to treat. Whereas an

offer will lead to a binding contract on acceptance, an invitation to treat cannot be accepted it
is merely an invitation for offers.
Discussion
General rule is that advertisements are only an invitation to treat. It would be more clearer if we look
at the following cases.
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1. Fisher v Bell [1961] 1 QB 394

2. Partridge v Crittenden [1968] 1 WLR 1204
Fisher v Bell [1961]1QB 394: The defendant displayed in his shop window a flick-knife with a tag
bearing the words `Ejector knife - 4s'. He was find guilty of the criminal offence of offering such
knives for sale under s1 (1) of the Restriction of Offensive Weapons Act 1959. The defendant
appealed against his conviction. In this case the shopkeeper didnt make any offer , it was just like an
advertisement .He wanted to invite people to talk more about flic-knife and make a offer to buy this
from him. Displaying of the flick-knife was just an invitation to treat, not an offer for sale. Only he
will sell his knife to whom that makes an offer to buy it. So the court dismissed the Prosecutor
appealed.
Partridge v Crittenden [1968] 1 WLR 1204: In this case Crittenden gave a notice reading Bramble
finch cocks and hens, 25s each was placed in the classified advertisement page of a periodical for
bird fanciers. The plaintiff was charged with the offence of unlawfully offering for sale a wild live
bird contrary to s6(1) and sch. 4 of the Protection of Birds Act 1954. However, this advert was held to
not be an offer if it were, people may accept the offer for more stock that exists and then plaintiff
would be in breach of contract. Therefore, the courts decided plaintiff was not making an offer since
he didnt intend to satisfy every acceptance. So he could not be guilty of the offence as charged.
But in some circumstances an advertisement is in so detailed it might be a unilateral offer. Because an
advertisement is just only an Invitation to treat where People ask more about the product .If
advertisement contains full details then people directly response to the product. The contract normally
can be accepted without any further negotiations between two parties. It would be clearer if we look at
case of
1. Carlill v Carbolic Smoke Ball Co. (1893)
Carlill v Carbolic Smoke Ball Co. (1893): The defendants, the proprietors of a medical preparation
called The Carbolic Smoke Ball, gave an advertisement in which they offered to pay 100 to any
person who used one of their smoke balls in a specified manner for a specified period but who
nevertheless still contracted influenza. The defendants also told that they had deposited 1,000 in a
named bank showing their sincerity in the matter. The plaintiff, on the belief of the advertisement,
bought one of the balls and used it in the manner and for the period prescribed. Nevertheless, she
contracted influenza. Now she claimed her 100.But they rejected her. She brought a claim to the
court. In this case the advertisement was so detailed that it seemed to be a unilateral contract. They
clearly gave information about the using method of carbolic smoke ball and they also stated what they
will do if their product fails to do so as they said. The amount of deposited money was also mentioned
by them. Due to this reason their advertisement turned in to a unilateral contract. An advertisement is
only an invitation to do further discussions between two parties. When Carlill brought the smoke ball
from the Carbolic Smoke Ball Company instantly they were bound in a unilateral contract. It thus
appears that, if the advert is capable of being construed as a unilateral offer, and the intention to be
bound is sufficiently clear, as in the above situations, an advertisement may be construed as an offer.
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Question 3
Introduction: The doctrine of vicarious liability lies at the heart of all common law systems of tort
law. This is one of the most important legal doctrines under which one person can be vicariously
liable for tort of another person. Vicarious liability is about a triangular legal relationship where A is
vicariously liable to B for the breach of duty or damage done to B by C. For example,
A=Icon college of technology and management
B=Myself
C=Lecturer
A=ICON COLLEGE (3rd party)
Special relationship
Vicarious
Liability
B=Myself (Suffer harm)
(Defendant)
C = Lecturer
I am studying In Icon College. If one of our lecturer doesnt teach us properly and I fail to pass the
exam then Icon college is vicarious liable for it. Because the lecturer works for Icon College as an
employee. Due to breach of duty or damage done to me by my lecturer I can sue Icon College. Here
Icon doesnt cause the harm directly but Icon and its lecturer has a special relation. Icon is only third
party who is involved by the act of its employee. There are two essential elements of vicarious
liability. Firstly there must be a relationship such like Icon has a relation with its lecturer (defendant)
as an employment relationship. And secondly the tort committed by the lecturer must be referable in
some particular way to the relationship between Icon and the lecturer. In other word vicarious liability
is taking responsibilities of one person who cause harm to another person.
The classic example is an employer being liable for the action of his employee. This has been well
established in Tort law. There are few reasons behind the thought of the courts for imposing vicarious
liability on employers. These are
1. Benefit and Burden principle: Court thinks that if any employer gets benefit from the work of his
employee then the employer must have to take the burden of his employee.
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2. Relation with business: Negligence by employees should be a cost of the employer's business.
That means any tort committed by the employee must be related with business terms and condition.
The tort must have to create a financial cost also.
3. Employer position: Employers are in better position to know the potential cost of accidents, and to
take appropriate precautions. Generally employee does not have the available funds to meet the cost
of his committed tort.
4. Employers consciousness: Employers are in a position to encourage safety procedures. They can
provide training to their employees to avoid any mistakes.
5. Employers control: Vicarious liability creates an incentive for employers to control/dismiss
employees who are likely to cause harm.
6. The rule of honour: It says that masters ought to pay for the mistakes of their servants. If the
employer treats like a master and the employee works like a servant then master is liable for the tort of
his employee.
7. Obligatory insurance: Generally almost every employer is covered by obligatory insurance. On
the other hand employee doesnt have the obligatory insurance. It seems that the cost of their
employees tort like a business cost which may be covered by the obligatory insurance.
Who is an employee?
The employer is only liable for the torts committed by his employer, not for the torts committed by an
n independent contractor. So it is very important to identify who is an employee or who is an
independent contractor. This is the question for the courts to decide and doesnt depend solely on how
they describe themselves. This question was decided through the control test. Due to some correction
this question was developed by 3 more tests.
Control test: The difference between an employee and an independent contractor can be summarised
in this way :In one case master can order or require what is to be done ,while inn the other case he
can not only order or require what is to be done ,but how it shall be done. This test was traditional
test.
The nature of employment test: This test based on the nature of two parties work. Who has a
contract of service is employee, and the other who has a contract for service is independent
contractor.
The integral part of business: This test was proposed by Lord Denning .The summery of this test is
if a person is employed under a contract of service he must be a part of business. By contrast under a
contract for service, the workers work although done for the business. But it is not integrated into
business only accessory to it.
Composite tests: The modern approach is to use a composite test joining control and a range of other
considerations, including the chance of profit or risk of loss, ownership of assets, nature of payment
etc. The main test is asking the person that does he engaged to perform these services while
performing them as a person in business on his own account? If the answer is yes, it is a contract for
service. If no, it is a contract of service.
Course of Employment
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An employer is only liable for the torts committed by his employee in the course of employment. The
employee will be in the course of employment where the act of employee is either expressly or
impliedly authorised by the employer, an unauthorised way of doing an authorised act, or an act which
is related to what the employee is employed to do. An employer does not liable for the tort committed
by his employee in outside course of employment. If any employee do anything excess without the
permission of employers then the employees activities could give raise to criminal liability. It
include
Employee Carelessness:
Whenever an employee does anything which not authorised by the employee in the time of his
contract of service and makes any mistake then the employer is vicariously liable for it. In the case of
Century Insurance v. Northern Ireland Road Transport Board [1942] AC 509
A petrol tanker driver lit a cigarette and negligently threw away the lighted match while petrol was
following, which caused an explosion and widespread damage. The courts decision is that the driver
was still acting in the course of his employment, his job was to wait during the petrol flowed. But
lighting a cigarette was for his own benefit, not his employers. That was not sufficient to
discharge the employer of their liability.
Excess of Authority:
Excess of authority means to do more than told by employer In the case of Poland v. Parr [1927] 1 KB
236. The security guard hit a boy with his open hand, the boy got injure when he fell under a wagon.
Here he was acted an authorised work in an unauthorised way. The courts decision was the employer
is not liable because the guard have gone beyond the scope of his employment.
Express Prohibition
Vicarious liabilities can be arisen when employee is doing something which is totally forbidden to do.
In the case of Limpus v. General Bus Co (1862) 1 H & C 526 the driver was forbidden to participate
in any races but the driver took part and made an accident. Courts decision is that while he was
driving he was under employers liability but taking part in race is only doing authorised work in an
unauthorised way.
Illegality
An employer is liable for the wrongful and unauthorised work of employee if it is authorised by the
employer. Employer may not be deriving any benefit from the wrong. If it is not authorised by the
employer then the employer is not liable for his employee
Question 4
There are three vital elements to establish a claim of negligence. According to W.V.H. Rogers
negligence as a tort is breach of legal duty to take care which result is damage, undesired by the
defendant, to the plaintiff. These are the vital elements. To claim negligence a claimant must be able
to show these three elements. Without one of this any negligence cannot be accepted by the court.
These are
1. Duty of care
2. Breach of duty
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3. Causation
This answer is going to focus on the courts have tried to develop a great test to establish a duty of
care.
Duty of care: This is the first element. To approve it a defendant must owe to the plaintiff a duty of
care. It means that a defendant is only responsible for any negligence if he fail to meet a legal duty to
take care. The claimant must have to show that the defendant was careless to take care of his legal
duty. The duty of care has at least two purposes. First one is provide an overview of different
situations in which liability may arise. Law only knows the relation between two persons who owes a
duty of care for century. But there was a lacking of general principle in which many cases were
illustrations. And the second purpose is limitation.
Court has developed the concept of duty of care by three most influential test.
The neighbour principle
In this case Donoghue went to caf with her friend .They ordered a bottle of ginger beer. The bottle
was metal sealed and she requested the waiter to open it. She drank some of the content of ginger
beer. When she finally lifted the bottle to pour the rest of ginger beer into a tumbler a snail came out
with the beer. Lately she complained of stomach pain and brought this matter into the court. The court
discharged the cafe due to her speech Thee bottle was metal sealed and found a new relation
between manufacturer and the ultimate consumer of manufactured product. Court thinks that when
manufacturers manufacture any products they should remember any one can be use their product
anytime from anywhere in the world. This is called narrow rule. This rule survived until 1980s before
the establishment of Consumer protection act in 1987.
Secondly Lord Atkin defined the neighbour principle as a duty was owed to person who are so
closely and directly affected by my act that I ought reasonably to have them in contemplation as being
so affected such people as my neighbour.
A revised test:
This is the second stage where the neighbour principle redefined by Lord Wilberforce. He revolved it
into a two-stage test in Anns v Merton London BC[1978] Ac728 at 751.
There were two questions first one is to identify whether the damage or injury was practically
foreseeable and there was a sufficient relationship of proximity or neighbourhood. If so a prima
facie duty of care arises. Second question was there any possibility that he defendant can put forward
policy considerations to disprove the liability.
The current test:

The test is now identified in this form. The claimant has to show three things if there is to be a duty of
care.
Foresight: It was reasonably likely that a person in the claimants position would be injured.
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Proximity: There must be sufficient proximity between the parties.

Fairness: It is fair, just and reasonable to impose liability.
No case is identified with this test, but one of its best discussions is in Caparo Industries v Dickman
[1990] 2 AC 605.
List of references:
1. Macintyre, Ewan (2005) BUSINESS LAW. 2nd ed. Great Britain:
Pearson Education Ltd.
2. Mckendrick, Ewan (2003) CONTRACT LAW. 1st ed. United States: Oxford University
Press Inc.
3. Rogers, W.V.H. (2010) Winfield and Jolowicz on Tort. 18th ed. London: Sweet &
Maxwell Ltd
Bibliography:
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1. Cracknell, D.G (2003) The law of tort. 4th ed. Great Britain: Old
Bailey Press.
2. Horsey, Kristy and Rackley, Erika (2009) TORT LAW. 1st ed. United
States: Oxford University Press Inc.
3. Kinder, Richard (2008) TORTS. 110th ed. United States: Oxford University
Press Inc.
4. Marsh, S.B and Soulsby, J (1985) BUSINESS LAW. 3rd ed. Beccelss:
McGraw-Hill Book Company.
Web link:
1. www.lawteacher.net
2. www.emplaw.co.uk
3. www.lawdit.co.uk
4. www.e-lawresources.co.uk
5. www.4lawschool.com
6. www.tutor2u.com
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Department of Business studies