asgmnt cl unit 5

7/27/2019 Asgmnt CL Unit 5

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Name: ARSLAN ALI

Ref No: ECL40085

COMMON LAW

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Introduction

Common law is a legal system that is largely formed by the decisions previously made by

courts and not imposed by legislatures or other government officials. The reasoning used to

interpret this type of law is known as casuistry, or case-based reasoning. It is a strict,principle-based reasoning that uses the circumstances of a case to evaluate the laws that are

applicable. Decisions that were made about similar cases are valuable, and the case in

question is evaluated on the basis of past cases. The strength of the similarity among the

cases, in turn, strengthens the reasoning based on them. (www.wisegeek.com, 2011)

Task 1- Business Contracts

1 a) Types of business agreement

A contract is a legal tool that allows unknown people to do business together by guaranteeinglegal enforcement of its terms. Although there are many types of business agreements, the

four most popular types are

1- Sales Agreements

2- Employment Agreements

3- Independent Contract Agreements

4- Confidentiality Agreements

Sales Agreements

Sales agreements can be executed between buyer and seller, the highest value sales

agreements are usually executed between businesses. The contract need not be evidenced

by single documents; however, the simple exchange of memos or emails can form a

binding contract under the Uniform Commercial Code.

Employment Agreements

In most industries written employment agreements are not required in order to form a validemployer-employee relationship, however, employment agreements are common in the whitecollar professions and in industries represented by labour unions. A good employmentagreement will cover work rules, duration of employment, remuneration, grounds fortermination and job duties.

Independent Contract Agreements

An independent contractor agreement is a contract between two independent parties

whereby one party performs services for the other. The party performing services may be

a company rather than an individual. Independent contractors differ from employees inthat they enjoy greater autonomy in performing their duties, and take greater risks with

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the projects they perform. An independent contractor agreement should address the

parties' relationship with great clarity, because significant legal consequences (such as

taxation and negligence liability) can turn on whether a party is ruled to be an employee

or an independent contractor.

Confidentiality Agreements

Confidentiality agreements are quite common in industries such as the software and

entertainment industries where the creation and protection of intellectual property such as

copyrights and trade secrets are critical to commercial success. These agreements are

often ancillary to another contract between the parties, such as when a software developer

is granted access to a client's proprietary information in order to perform the contracted

services. When two companies contract with each other, one company may require all

employees of the other company to sign confidentiality agreements with it as a condition

for signing the main contract between the two companies.

Key elements of a valid contract

1. Offer: An offer can be oral or written as long as it is not required to be written by law.

Offer begins the contract. Offer is what you offer to another party and that party promises

you to give something in return. It shouldnt be confusing or unclear. The individuality

and nature of the object which is being offered should and under what conditions and/ or

terms it is offered should not be changed.

2. Acceptance: Once the contract's terms are finalized, the other party can accept theoffer. His acceptance must be communicated. Silence cannot be considered a valid

acceptance. It should be written. Once a party accepts an offer, he agrees to be bound by

the terms of the contract.

3. Consideration: Consideration for a contract may be money or may be another right,

interest, or benefit. Consideration is an absolutely necessary element of a contract. In

consideration both parties should have their benefit. For example, during the sale of a

house, the seller's consideration is the house and the purchaser's consideration is the

purchase price.

4. Capacity of the parties to contract: Legal capacity is an essential element of a

valid contract.Capacity is each party's ability to understand what he is agreeing to in the

contract. Mostly parties do have capacity. But minors cant make a contract until they are

18. Moreover, mentally incompetent adults and drunk people they are not eligible to enter

into contracts because the law presumes they are not capable to understand terms and give

proper approval.

5. Intention of the parties to contract:It is a basic requirement to the formation of

any contract. A contract must include mutual agreement, commonly referred to as a

meeting of the minds" of the parties on all planned terms and essential elements of the

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contract. If there is mistake or misunderstanding, there cannot be an agreement so the

contract is void. Furthermore, if one party's agreement was inappropriately obtained than

contract will be void as well. This can arise if a party entered the contract under pressure,

due to the exercise of unnecessary influence or because of the other party's fraud or

misrepresentation.

6. Object of the contract: The ultimate element of a valid contract is legality. If both

partys action is illegal than contract is void and enforceable. For example, if a person

required to commit crime. Such as, murder for hire.

1 b) Rules of Offer and Acceptance

An offer is an actual or apparent intention to enter into a contract and that term of the

offer become binding as soon as it accepted by the person without any disagreement to

whom it addressed. Moreover, It is not what the parties do rather than what they may

have intended to do that matters.

An offer, to be effective, must be:

Clear and certain

Communicated before it is accepted

Offer can be reserved at any time before it is accepted. An offer can state the time limit as

well with which it is open for acceptance. If that time expires without acceptance than the

offer also expires. If no time limit is stated during which the offer must be accepted thanoffer remains open for the reasonable time after the expiry of that time the offer also

expires.

Acceptance of an offer makes a binding contract when the person to whom the offer is

made responds with an unconditional acceptance. If any new terms are suggested or any

proposed terms are revised in the letter of acceptance there cant be acceptance.

If the parties wish to avoid contract by playing childrens card game snap. It would be

better that no agreement is concluded unless some condition, such as both parties signing

the written contract documents, is fulfilled. In the absence of such a precondition beingfulfilled, the parties must abide by the rules of offer and acceptance. This includes the

following.

Acceptance must be unconditional and correspond to the terms of the offer.

Acceptance may be made by conduct.

Acceptance must be communicated, although postal acceptance generally

takes place when the letter of acceptance is posted not when it is received.

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Impact of new technology

The basic elements of creating a contract remain the same. In general, there must be an

offer, an acceptance of that offer, support and then consideration given by both parties.

However, these primary contract elements remain unchanged; the media used in contract

formation have changed completely over the past few decades.

Now that business is conducted through e-mail, instant messaging and Web sites, the law hasbeen forced to adapt old rules to these new practical commercial realities. For example, thereare many laws some very old that require contracts to be in writing and signed by oneor all parties to the contract. The law has been grappling with the question of whether and towhat extent e-mail confirmations or e-mail chains are enough writings, and whether theycontain valid signatures.

1 c) Rules of intention and consideration

Consideration is something in return, price for which the promise of the acceptor is bought. It

doesnt have to be money in terms; it can be a performance of an act.

Essential features of consideration are; it must be lawful, must be real not illusionary, need

not be sufficient, and may be given by promisee or any other person. It can be past, present or

future. Consideration is the price of other persons promise. Price can be forbearance,

detriment, loss, responsibility given or suffer. Promise can be the right, interest, profit or

benefit. A contract does not exist simply because there is an agreement between people. The

parties to the agreement must intend to enter into a legally binding agreement. This will

rarely be stated explicitly but will usually be able to be inferred from the circumstances inwhich the agreement was made. For example, offering a friend a ride in your car is not

usually intended to create a legally binding relation. You may, however, have agreed with

your friend to share the costs of travelling to work on a regular basis and agree that each

Friday your friend will pay you $20 for the running costs of the car. Here, the law is more

likely to recognize that a contract was entered into.

The party who denied the intention of creating a legal relation must provide burden of proof.

If the party doesnt provide consideration the party cannot sue on the contract this is known

as privacy of contract.

Additional rules;

Performance must be legal

Performance must be possible

Consideration must pass from the promise

Consideration must be sufficient but necessarily adequate

Consideration, in legal terminology, is what one party to a contract will get from the otherparty in return for performing contract obligations.

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Example: Developer promised to pay Artist $500 if Artist would let Developer use one of

Artist's drawings in Developer's multimedia work. The consideration for Developer's promise

to pay Artist $500 is Artist's promise to let Developer use the drawing. The consideration for

Artist's promise to let Developer use the drawing is Developer's promise to pay Artist $500.

1 d) Legal Capacity

According to the law, if two parties want to make a contract. Both parties should be legallyand capable for the formation of contract. Like if they are eligible to get into the contract ornot.

People who cant be the part of contract or cant enter into agreement are as follow:

Infants

Mental Patients

Drunkards

Infants: A person who is less than 18years is called minor or infants and lawdoesnt allow them to get into the contract. A contract made by minors wont be valid.Law gives flexibility to both parties in infants contracts. To infants, law protect themfor their inexperience and to majority there is no unnecessary hardship that makescontract with infants.

Mental Patients: law doesnt allow any intelligent person to make a contract witha person who is suffering from mental disorder. Such person is not liable for any loss

because mental patient is incapable to meet the conditions of the contract. While otherparty may have to face the problems by law.

Drunkards: it is also a kind of mental patient because when a person gets drunk.He/she loses the sense of taking decisions. So a wise person should not get into acontract with drunkards. But law says if the drunkards approve a contract after

becoming sober then he/she will be liable for everything what mentioned in acontract.

2) Specific contracts terms and their importance

Some of the specific contract terms are as follow:

Acceptance The unconditional agreement to an offer creates the contract. Before acceptance,

any offer can be withdrawn, but once accepted the contract is binding on both sides. Any

conditions have the effect of a counter offer that must be accepted by the other party.

Agent Somebody appointed to act on behalf of another person (known as the principal). The

amount of authority to deal that agent has subject to agreement between the principal and the

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agent. However, unless told otherwise, third parties can assume the agent has full powers to

deal.

Breach of contract A failure by one party to a contract to uphold their part of the deal. A

breach of contract will make the whole contract void and can lead to damages being awarded

against the party which is in breach.

Consumers A person who buys goods or services but not as part of their business. A

company can be a consumer for contracts not related to its business - especially for goods or

services it buys for its employees. Charities are also treated as consumers.

Franchising A commercial agreements that allow one business to deal in a product or service

controlled by another. For example, most car manufacturers give franchises to sell their cars

to local garages, which then operate using the manufacturer's brand.

Implied terms are terms and clauses that are implied in a contract by law or custom andpractice without actually being mentioned by any party. Terms implied by custom and

practice can always be overridden by express terms, but some terms implied by law cannot be

overridden, particularly those relating to consumers.

Joint Venture An agreement between two or more independent businesses in a business

enterprise, in which they will share the costs, management, profits or benefits arising from

the venture. The exact shares and responsibilities will be set out in a Joint Venture

Agreement.

Service Contract directors and officers of a company are usually given service contractsthat are different to a contract of service or employment contract. This is because directors

and officers are not always employees and the effect of employment law is different.

Void contract A void contract is one that cannot be performed or completed at all. A void

contract is void from the beginning and the normal remedy, if possible, is to put things back

to where they were before the contract. Contracts are void where one party lacks the capacity

to perform the contracted task, it is based on a mistake, or it is illegal.

Company Seal An embossing press used to indicate the official signature of a company

when accompanied by the signatures of two officers of the company. Since 1989 it has been

possible for a company to indicate its agreement without use of the seal, by two signatures

(directors or company secretary) plus a formal declaration. However, some companies still

prefer to use a seal and the articles of a company can override the law and require a seal to be

used.

Task 2- Law of Tort

Law of Tort in business activitiesA fundamental aspects of tort; tortuous liability and

business operations; advantages of using tortuous, as opposed to contractual, remedies

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Forms of tort liability The tortuous liability of occupiers, employers liability including

vicarious liability for employees, health and safety issues, strict liability, difficulties of

practical application

Strict Liability:

Strict liability is a legal doctrine that makes some persons responsible for damages their

actions or products cause, regardless of any "fault" on their part. Strict liability often applies

when people engage in inherently hazardous activities, such as doing "blasting" in a city, or

keeping wild circus animals. If the blasting damages you -- no matter how careful the blasting

company was --it is liable for the injury. Similarly if the animals escape and injure someone,

the fact that the circus used the world's strongest cages and the highest standard of care

imaginable will not let it get off the hook.

PRODUCT LIABILITY:

Product liability is the area of law in which manufacturers, distributors, suppliers, retailers,

and others who make products available to the public are held responsible for the injuries

those products cause.

There are three major types of product liability claims:

Manufacturing defect

Design defect

A failure to warn

However, in most states, these are not legal claims in and of themselves, but are pleaded in

terms of the theories mentioned above. For example, a plaintiff might plead negligent failure

to warn or strict liability for defective design.

Elements of Tort of negligence

ELEMENTS:

Duty of Care

Breach of the duty

Damages

Duty of Care You must take reasonable care to avoid acts or omissions which you canreasonably foresee would be likely to injure your neighbour.

Who, in law, is your neighbour?

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The answer seems to be persons who are so closely and directly affected by my act that thatI ought reasonably to have them in contemplation as being so affected when I am directingmy mind to the acts or omissions which are called in question.

Standard of Care

The reasonable person test.

Whether a hypothetical reasonable onlooker would have foreseen the possibility ofharm or loss to certain individuals involved in the particular event

Professionals have a higher standard of care applied e.g. orthopaedic surgeon thestandard of care that must be exercised is that of a reasonably competent orthopaedicsurgeon.

Breach

1. Foresee ability

Whether there has been a breach requires an analysis of two things:

Whether the danger or risk was foreseeable; and

How a reasonable man would have responded to the foreseeable risk

A court may take several things into account:

The probability of the risk of injury

Gravity of the harm

Burden of eliminating the risk; and

Social value of the defendants conduct.

Damage

There has to be some actual damage for the claim to succeed.

There needs to be a connection between the negligent act and the damage caused

Causation - the but for test

The party being sued should not be held liable for all the consequences of the damage

Remoteness

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Defences

Contributory Negligence

E.g. not wearing a seatbelt in a car crash reduced by 25%

Voluntary Assumption of Risk

Exemption Clauses

Bibliography(2011, 11 10). Retrieved from www.wisegeek.com:

http://www.wisegeek.com/what-is-common-law.htm

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asgmnt cl unit 5

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