A contract can be termed as a legal agreement that takes place between two or more parties enforceable under law. This report has different scenarios and contractual situations that forms valid in some cases and in some cases not. Thus over here in this paper, different forms of contractual liabilities and the elements of the same will be discussed as per their applicability in different situations (Stone and Devenney, 2014). This report also includes impact of different types of contract on different parties with reference to their meaning and effect. Different terms like tort of negligence, duties of care, etc tend to make up the basic structure of the entire report and also imply their utility in different cases.

LO1 Essential Elements of a Valid Contract


As per the legal and administrative aspects of contract, it can be defined as an agreement within certain specific offer and acceptance that takes place between two or more parties where the people promises to exchange goods and services so as to get something valuable benefits known as considerations. Like in case of Mr. Powell when he went into oral contract by paying Jess an advance amount of £450 (Cross and Miller, 2011). For the formation of a valid contract, there are number of elements in it that makes it legal and can be classified as follows:

  • Offer and acceptance with the help of which the contracting parties get into relation and it is very important to make a contract a valid and legal one.
  • Consideration: it is the benefit that people derive out of the agreement between both of them (Atkinson and Cuthbert, 2006).
  • Free consent is another element which explains that the agreement done is with the free mind and with no pressure.
  • There should also be the intention to undergo a contract or a legal relationship by both the parties like Mr. Powell and Jess had where it was the responsibility of Jess to not to sell his van to anyone else than Mr. Powell as he has already made an advance payment of certain amount (Sol and Westerveld, 2007).


The impact of different kind of contract can be diverse as these contracts can be bilateral, unilateral, voidable, executor, oral and many others. Further explanation to the same can be as follows:

Executory contract: The impact that executor or oral contract might have can be different as it is based on the trust and truthfulness of the parties and there does not take place any written agreement. There has also not been made any physical contact by the contracting parties as per the scenario mentioned in the case (Li and Lin, 2010). The impact of the same is equally as strong as it would have been in case of written contract and is equally legal and valid.

Bilateral contract: Coming on to bilateral contract, there are two parties that exchange a mutual and the reciprocal promise and then the execution take place. In unilateral contract, the promise is made by only one party and the person who collects the reward is never entitled to do anything.

Implied contract: Similarly, implied contract in found on the terms of good faith and is popular in UK which also brings a great impact on contracting parties (Quagliato, 2008).


Taking into consideration the case of Jess and Mr. Powell, over here Mr. Powell has made a payment of £450 in advance to book the van being sold by Jess. After the payment, Jess also agrees to keep the van for him until he arrives. Thus there is a valid offer and acceptance by both the parties. Their clear intentions make this a valid contract and there is also a consideration for the same (Dobson, 2013). Another term that can be used over here is condition, as there was a condition kept by Jess that he would sell the van to anyone if anyone else asks for the same in the duration until which Mr. Powell would arrive. Thus he made a payment in certain amount and again put a valid condition against Jess to not to sell the van now to anybody else. And if he sells the van to another party, then there will be a breach of contract which has strict actions by law. Thus all the provisions that are covered under a contract are mentioned in this case (Zoll, 2012).

LO2 Application of Elements of Contract in Business Scenario


In a contract, the main element according to the given case is a Legal binding, that further needs to supported by certain valuable consideration along with the fairness and transparency which was absent in the contract that was present between local council and Barry.

Element of fairness: The terms that were mentioned on the ticket were although present which clearly states that council is not liable for any kind of damage (Normington, 2013). But the chair that they had provided to Barry was already damaged so collapsed. Thus the trust on local council was broken as they did not provide chair to Barry in healthy condition.

Element of transparency: Barry also did make a full payment for the chair, thus as per contractual liability, the council is liable to pay Barry for the damages and should be refunded. The terms that council mentioned on the ticket should have been clarified by them to the customers to avoid any ill situation (Izzi, 2014).

Exclusion clause: This clause was already mentioned by Local council on their tickets and was very clear about their ‘no responsibility’ in case of any mishappening. But council did not mention them very clearly and ambiguous language was used.


The acts or laws that are applicable in the current situations are with regards to unfair trade practices, consumer protection laws, etc. As per the exclusion clause of Unfair Trade Contract Term, 1977, one party can remove his liability whatsoever when arises under any contract. Similar is the case over here with the council as they also wish to limit their liability in events and also can limit down the amount of damage that has been caused to Barry for which he is claiming (Harpwood, 2009). On the ticket, the local council had clearly mentioned all of its terms and conditions but did not inform the customers about the same ad were also written very unclear because of which Barry felt cheated. He bought the chair in good faith so the importance should be given to statement of fundamental factors at the time of finalising the contract. This would rather have helped in avoiding any kind of injury to Barry under the Sales of Goods Act, 1979 (Giliker, 2010). Other than this, there is also a Consumer Contract regulation of 1999 and Unfair Contract Terms Act of 1977 which can also be applied within the situation in the present case that are applied within so as to control all the possibilities of exploitation of other people renting chair from local council.


At the time when the contract is agreed, signed and finally accepted, it is very difficult to break and get rid of the same especially when any of the contracting party is not in agreement. Thus there is a great need for mutual consent and as per the case study, the terms in the ticket also says that if any kind of loss occurs, then the council is not supposed to be held responsible for the same. Thus as per these terms, Barry might also not be liable for any kind of refund or compensations (Stone and Devenney, 2014). Another mistake that Barry make is that he accepted the deal without reading its norms properly. Thus there was a mutual offer as well as acceptance that make the entire contract in favour of local council.

LO3 Liabilities in Different Business Contexts


The facets that are in relation to the contract or tort liability bring in a great implication within the relationship so as to form a liability agreement. So as per the contract, it becomes the liability of Adam towards Brian to compensate him. The reason because of which the same needs to be done is because of his lack of right tactic as he withdrew from the reward without communicating the same to the participants of it. This thus becomes a clear breach of contact enforced under law because of which he is liable to pay Brian a reward of £1000 (Magnus, Martin-Casals and Boom, 2004). And according to the liability in tort for the civilian, it also is the legal requirement that need to be fulfilled in the contract.


To be liable for a thing under any law indicates that a person should be responsible for in some or the other way if he violates any law or undertakes any criminal activity. The liability of negligence for the defendant depends upon the presence of duty of care. Other than this, negligence is also compiled by a person who can bring about the ill consequences but also there are certain limits that are defined under the contractual law with regards to tort of negligence which also enables the enforcement of the same law. Negligence also features different twists and is usually regarded towards contracting parties where contractor is one and contractee are multiple. Along with it, there are plenty of remedies that are also available for repairing such damage suits (Eroglu, 2008). Also over here, Adam is liable to pay £1000 reward to Brian as it was a fault on his part that he broke the contract in the mid without even informing the participants other than Brian. Thus it has also been witnessed that there exists similarity of the relationships between all the parties because Brian was also simply one of all participants and their contractual relationship according to the rule comes to an end only when the competition gets completed (Cross and Miller, 2011). There also exists vicarious liability because the contracting parties here are deemed responsible for the negligence of another.


Liability can be said vicarious when a strict secondary liability arises under a common law. Here the third party also carries their share of liability and this kind of liability generally arises in conditions wherein one party is expected to be responsible for action of 3rd party (Oughton, Marston and Harvey 2007). In the situation discussed in the case, Brian was one of the parties within contract who were neglected of sharing up of change in contract. Adam who was the organizer of the event did not inform all the parties taking part in it about the withdrawal of the price money. Publishing something in the newspaper is a mass media channel to communicate with population on some news and if Adam wanted to cancel it, then he should have let people know about the same prior the competition again through any of the media channels. Brian was also one of the participants who successfully completed his swim from English Channel to Dover. He was very disappointed to hear that Adam refused to pay him the prize money as a result of which vicarious liability aroused (Atkinson and Cuthbert, 2006).

LO4 Evaluation of Elements of Tort and Negligence

Occupier’s Liability Act, 1990: describes that there is a duty of care for the occupier which he has towards the people all those who are coming to Poshplace as guest or customers. There should also be a promise to provide them with all kinds of safety measures and the dangers that the customer might face in the hotel. As per this act, there also exists a limited liability for the occupier or its visitors (White III, Joplin and Salama, 2007). As per the given case study, there are different situations that are creating liabilities in different business scenarios as per the vicarious liability act. Along with it, there also exist different safeguards that are available for the employer and the duty of care is held which tend to remove all the obligations towards the claimant for their act of negligence.

Statement A: Hotel owner is not liable for the physical damage caused to Roger in the form of skin rashes. It was his carelessness which caused him this injury. Owner had already provided him with the safety gloves which he was supposed to wear at the time of working in kitchen or washing the dishes (Sol and Westerveld, 2007).

Statement B: Yes, Roger here doe have right to claim for the one physical injury that happened to him because of the head chef. Both, owner of the business, as well as the head chef are vicariously liable for the damage caused to Roger.

Statement C: Mark was surprised to witness a robber in his hotel room and was surprised more to know that the robber was the employee within this hotel. He was the hotel’s gardener, Neil. Thus both the gardener and owner are vicariously liable towards the guest not only for retuning back the stolen goods but also compensating him for the same (Li and Lin, 2010). Neil had complete intension of stealing and is liable for punishment as well.

Statement D: Mark was the person who is in fault right now because even after the instructions written, he did not read the same and ignored. Thus hotel is not at all liable for the fault of Mark.

Statement E: The action of Neil is criminal acts and is a serious crime that needs to be reported instead of applying the simple principles of negligence (Quagliato, 2008).

Statement F: Under Occupier’s Liability Act, 1990, Mark cannot claim for the damages caused to him from entering the pool. According to this act, none of the peoples can claim Poshplace because even after the display of warning, people did not bother to read it and blindly entered the pool. Mark cannot claim hotel or the owner towards the same.

Statement G: Neil robbed with full intension thus claiming the owner for the wrong doings of Neil is also quite unacceptable under vicarious liability (Dobson, 2013). In this situation, both the main as well as third party are vicariously liable and have to compensate Mark for the same; otherwise Mark is also free to undertake any legal action.


It can be attributed that there are many factors that need to be taken care of while entering into any contractual relationship otherwise the negative consequences of ignoring such things are quite painful. So to form a healthy contract, there is need of sheer carefulness and activeness (Zoll, 2012).


  • Atkinson, C. and Cuthbert, P., 2006. Does one size fit all?: A study of the psychological contract in the UK working population. International Journal of Manpower.
  • Dobson, A., 2013. Directors' liability for death or workplace injury. International Journal of Law and Management
  • Li, Y. and Lin, Y., 2010. A research on the psychological contract structure between service enterprises and customers: An empirical research on China's banking industry. Nankai Business Review International.
  • Quagliato, B. P., 2008. The duty to negotiate in good faith. International Journal of Law and Management.
  • Sol, E. and Westerveld,M., 2007. The individual job seeker in the sphere of contractualism. International Journal of Sociology and Social Policy.
  • White III, O. G., Joplin, W. R. J. and Salama, F. M., 2007. Contracts and conflict resolution strategies in foreign ventures: a transaction cost perspective. International Journal of Conflict Management.
  • Zoll, F., 2012. The binding power of the contract: Protection of performance in the system of the Common European Sales Law. Journal of International Trade Law and Policy.

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