Aspects of Contract and Negligence

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Introduction to Aspects of contract and negligence

Agreement between two parties for specific performance in against of mutual consideration which is enforceable by law is known as contract. For its validity it is mandatory that agreement should fulfill entire essential elements of contract. Following report is based on "Aspect of contract and negligence". Report is comprises of discussion in detail for given case study. It will include principle of contract and its impact. Applicability will be described for following points for given scenarios (Heine, and Kerbe. 2002). Further there will be description of sales of good act and consumer credit act. Difference will be included for different types of businesses and legal requirement for its formation and dismissal. For the logical suggestion for given case study case sections will be used as references.

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Task 1

Basic principles of contract

Principles are essential of contract which are required for its valid formation and conversion of agreement into contract. Description of basic principles between Linda Green and a potential employee is as listed below-

Offer and acceptance- It is the initial and major principle that says there should be certain offer and valid acceptance to that offer by the parties. In the given case Linda Green should offer the employees with specific terms and that offer is required to be accepted by potential employees without any modification.

Consideration- In law it is know pro quo which is Latin word which refers to something in against (Middlemiss, 2012). It is mandatory to be appropriate but it is required be in value which can be measured. Linda Green will give pay to its employees in against of the services provided by them.

Legal intention- Formation of contract is done if there is intention of parties to create legal relationship to fulfill contractual obligation. Contracts by Linda Green should not be created on basis of love and affection. There agreement should be eligible to create liability for performance for both the parties.

Impact of different types of contract

Types of contract is determined on the basis of its formation. If terms and conditions are determined orally it is verbal contract. If written draft is prepared by parties it will be known as written contract. Terms of contract can be bifurcated in two parts which are expresses and implied terms. Legal terms which should be included in contract between Linda Green and there potential employee is as follow-

Expressed terms- Such terms will be included by acceptance of both the parties that are Linda Green and employees. It will be clearly defined. Expressed term in there contract can be time period and payment of employment (Oughton, Marston Jand Harvey 2007). Working hours and policy of work should be defined. There draft of contract should include the situation if there is breach of condition and warranty by any of the party.

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Implied terms- These are impliedly inserted in the terms of contract. It is determined by court of law, customs and practice. In the agreement between Linda Green and employees implied term will be there work will be conducted fairly which will not be against public policy. They will not deceive and give there performance with honesty.

Applicability on given case-In the given situation the attitude of wholesaler is contradictory to implied terms of contract. According to him the products introduced be agent should be use until there is positive proof for allergy. With the usage of this product it was discovered that it is not good for most of the skin types (Schaffer, 2009). Hence Linda Green should not accept this behavior by her wholesaler. She should not use products which are harmful. As if she do so she will be in trouble which will lead to contractual and legal issues. If wholesaler is still stuck to his point contract can be terminated by Linda Green for breach of implied terms.

Task 2

Elements of contract in given business scenarios

As per sales of goods act 1979 registered under law of UK goods must be according to description which should ne of satisfactory quality. Goods need to be eligible to fulfill the need for which it was purchased. Fit can be referred to regular use and specific use which is agreed by customer to his seller. In the given scenario equipment are purchased by Linda Green from her main wholesaler. Equipments purchased by her was not according to quality as the hair dryers were found to overheat and burn out after only use of few weeks. Complain was made by for products to wholesaler by Linda Green. Wholesaler was not ready to change the product and he was giving the reason that equipments were not design according to salon usage. Linda said but purchase was made for purpose of salon only.

Hence according to Sales of good act, 1979 the legal points upon case can be filed by Linda are- First goods were not according to her desire and requirement. As she had use it for purpose of salon and goods were not eligible to satisfy the want of Linda Green. Second should be capable for both purpose general and specific which was agreed by seller from its customer. In the scenario equipments were purchased on the advice of assistant manager who clearly knows that goods are purchased for the use of salon (Rush, and Ottley, M006). So the reason given by wholesaler is not logical. So on the basis of following point case can be filed by Linda Green to wholesaler either he should exchange the good or return the amount. Therefore according to the Act wholesaler is under obligation for to get goods replaced. There is also right available with Linda Green to get amount refunded as goods were faulty.

Law on terms in different contract

Consumer Credit Act is an act of parliament of United Kingdom which was established in 1974. Under the content and form of credit agreements are covered. This includes process which are linked to event of default, termination or early settlement (Plimpton, 2007). According to act it is said that credit worthiness should be assessed with the reference of amount of credit which is provided by creditor. With the section 75 of Consumer Credit Act extra protection is provided on the transaction above £100 and up to £30,000 of which payment is done by credit card.

Under this act provision of credit and supply of goods to individuals is covered. Individuals are included of sole trader and partnership firms in the act of consumer credit which is regulate by UK. Linda Green is working as a sole trader, as following are the key issues that is required to be considered by her before embarking on future credit agreements with her suppliers-

Agreement- It is the form which regulates whole contract prescribed by statutory instrument. Such draft should be comprises of financial information which must be place out in that specific order.

Clear terms and conditions- In the contract of credit there should be clear terms and conditions which is required to be fulfill by performance of both the parties. Previously in that contract breach was because of uncertain communication for need of products (Palmer, 2014). Objectives of purchase should be clearly communicated by Linda green to dealer so the goods were according to that.

Time duration and amount of credit- while making such agreements amount should be specified and certain which is required to be paid. It is also required to define time period in which amount of credit will be paid.

Termination of contract- At the time of drafting it should be clear that if products which are purchased are not eligible to satisfy the need it will be return and contract will be terminated (Oughton, Marston and Harvey 2007). According to point draft of penalty in the situation of nonperformance or poor performance.

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Consumer credit is governed by legal regime which is very complex and prescriptive. Hence to avoid blunder and legal issues which was occurred in previous credit contract with wholesaler Linda Green should consider this issue before embarking credit agreements.

Task 3

Difference between sole trader, partnership and a limited company

According to law of United Kingdom there are three type of organizations. Description of such businesses is as follow-

Sole trading- In such type of businesses whole management is handled by single person, that is whole and sole of the entity. He is liable for all losses and eligible for all profits. In the situation of excess amount can be recovered by creditors from there personal assets also. Therefore there liability is unlimited (Kidner, 2008). Requirement for sale trader is to take license for conduction of business from the local authority. He is liable to pay taxes on his earning of business. They should notify inland revenue (IR) and National insurance contributions (NIC).

Partnership- It is mutual agreement between two or more parties to run business and having objective to earn and share profits. Partners in the firm are obliged for all profit and losses. Risk and reward among them is distributed according to there profit sharing ratio. There are required to get their deed registered . They are also need to notify (IR) and (NIC) agency.

Company- Mainly companies are of two types that are public and private. Such businesses has separate legal entity from its members (Heine, and Kerber, 2002). In this organizations members have limited liability . It is required to get registered under companies Act 1985. By this it receive separate legal entity.

Consideration before selection a name

Name is identification for business so for its selection it is essential to choose it wisely. By Linda Green the name selected for her salon is "Scissors Salon". For getting this name registered she is required to follow such points for its protection-

Uniqueness- Name selected by business is required to be unique which can be highlighted and eligible to create brand for its business (Hatzis, 2012). It should not be common, if it is there will be issue separate identification of organization.

Availability of name- After selection of name Linda Green should check the availability. Selected name should be available in web with it domain.

Identity of name- If the name is available it should be considered that whether that name is according to identity or not. Assessment is made on the point of view of brand image.

Logo- Name of the business should be that much unique and special which can create logo for organization (Gray, 2010). Logo work as face of business which is represented at the time of advertisement on social media and publish media. It is the base to create first impression on mind of potential customer.

Distinguished impression- Selected name for business should not have adverse impact on society. As the name should not be controversial. It should create good image of business in the market or industry where they are operating.
Reflection of name on business philosophy and culture- Name should represent the work which is done by organization.

Claim for name- Business is required to choose such name which should not resemble or same as existing organization. Copy of name or brand is ethically wrong which can create legal issues for business.
On the basis of following points enquiry should be made by Linda Green in office of patent and trademark in United kingdom that proposed name is available or not (Employer Vicarious Liability. 2013). If the selected name is eligible to satisfy all the criteria described above that is can be selected by her for new organization. Moreover for the protection of name Linda can go for incorporation of name for the registration of business.

Essential steps for dissolution of the business should the business fail

If the business is not eligible to earn profit and getting fail in its operations that it is stage of dilution of business. For closing entire activities of organization is a critical task which is known as termination of business.

While closing business has to go from tax issues, financial ramifications and personal issues with stakeholders of entity.

If Linda Green wants to dissolve business she is required to follow the described steps in appropriate manner for successful termination-

  1. If she is operating as a company or partnership firm, then she is required for some legal formalities. That are consultancy with lawyer, liquidator, stakeholders and many more. But in case of sole proprietorship there is as such no requirements of this policies.
  2. Business is required to notify to tax agencies and board of revenue regarding to the dissolution of firm in written manner with authorized signature (Elements of Law of Contracts. 2012). Sole trader is not required to file such thing but they should pay their liabilities and solve the issue with their external and internal parties.
  3. About the activities of termination, it is required to inform it local agencies and authorities. This is done to bring existence of business to the end.
  4. Linda Green should notify all the parties who are linked to the business for its termination.
  5. Final claims of business should be satisfied by them with sufficient formalities and documentation.
  6. Therefore in this prescribed manner business can be dissolved by Scissor Salon by Linda Green.

Task 4

Identification of statuary provisions regarding employees of business

Business can be held vicariously liable for the act of their employees as they are under position to influence them. The right and liabilities are defined under Employment Rights Act, 1996. Following are some essential elements of this law which is require to be followed by business-

  • According to act it is suggestion to organization to make written contracts with employee while procedure of recruitment (DiMatteo, 2012). Draft of contract should be provided to employee within 8 week from initiation of employment.
  • Training should be provided for work and other related facilities so employees can effectively manage their work. Organization is required to pay them monthly payments without any delay.
  • If employer wants to terminate its employee he should gave prior written notice before it. According to section 86 of the Act reason should be proper enough to conduct termination.
  • It is included right of business for dismissal of employee but as per section 98 (2) without logical reason business can't do so.
  • Security is provided by section 182 to the employees for the payment of their work, if there is situation of bankrupt or insolvency.

As per above description Linda Green is recommended to create written contracts with their potential employees. By written contract there will specific terms and conditions which can be referred in the situation of contradiction. She is required to pay regular monthly payments for the services provided by them (Craven, and Hay, 2004). Before starting work at salon by employee an adequate training should be given so they can easily match standards of business. If there is situation of termination of employee there should be logical reason with Linda Green and written notice should be provided by her for the situation. Even in situation of insolvency she is under obligation for settlement of payment with her employees according to section 182.

Grounds for positive dismissal

It is not necessary that all recruited employees are according to requirement of business. If the recruited one is not eligible to meet the criteria, in that situation that employee will be dismissed by employer.

Dismissal can be done only on logical backgrounds that can be as follow-

Misconduct of employee- If there is not ethical behavior by employees in the business environment then there is right with employer for termination.

Lack of capability- Recruited person is not eligible for work or inefficient which was not cleared at the time of contract then he can get terminated.

Legal issues- if there are circumstances which makes employee legally incapable to operated. For example employee is culprit or engaged in some work which is against public policy (Collins, 2004).

Other logical reason- Except these reasons other logical reason can be used for dismissal.

In the given situation employees can be fired by her on the ground of misconduct. Their behavior was not ethical so do not follow the instruction of their employer. For the termination she is required to follow a procedure-

  • Firstly she is required to give written or verbal warning to employees for the misconduct (Apme, and et al, 2004). Clause should be inserted that if the same occur again they will be fired. If there is minor issue verbal warning is sufficient but if there is major issue proper drafted letter is require to be given by her.
  • If there is no effect of warning final letter of termination can be given by her. In the letter she is required to define reasons for it. Meeting can be held by her with linked parties and hearing on appeal if made by employees.
  • Final settlement is required to be paid by her for the services provided by them (Brand, and Davenport, 2012).


From the present project report it can be concluded that contract is legal agreement between parties by which they can obliged for performance. Formation of contract is done if all the elements are present in agreement. Terms should be specifically define to avoid the issue. For the credit agreements clauses of consumer credit is required to be followed (Alkhamees, 2012). Business should taken care of work conducted by their employee in term of employment else they can be vicariously liable. For the dismissal of business proper steps are required to be follow which are included in termination. If there us misconduct by employees business can dismiss them by giving them proper reason and written notice.


  • Middlemiss, S., 2012. The legal impact on employers where there is a sham element in contracts with their workers. International Journal of Law and Management.
  • Oughton, D., Marston J. and Harvey B., 2007. Law of Torts. Oxford University Press.
  • Padhi, K., P., 2012. Legal Aspects of Business. PHI Learning Pvt. Ltd.
  • Plimpton, L., 2007. Business Contracts : Turn Any Business Contract to Your Advantage. Entrepreneur Press.
  • Rush, J. and Ottley, M., 2006. Business Law. Cengage.
  • Schaffer, R., 2009. International Business Law and its Environment.
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