ACNB A1 F08032 Business law

Contract law, Explain the importance of the essential elements required for the formation of a valid contract, Discuss the impact of different types of contract, Analyse terms in contracts with reference to their meaning and effect, Apply the elements of contract in given business scenarios, Apply the law on terms in different contracts, Evaluate the effect of different terms in given contracts

Assignment Front Sheet

Pearson BTEC Level 5 HND Diploma in Business

(Accounting)

Y/601/0563 Unit 5: Aspects of Contract and Negligence for Business

10 September 2016 To be determined

Assignment title Contracts

In this assessment you will have opportunities to provide evidence against the following criteria

Indicate the page numbers where the evidence can be found.

In this assessment you will have the opportunity

to present evidence that shows you are able to:

Tas k no.

Evidence (Page no)

1.1 Explain the importance of the essential elements required for

the formation of a valid contract 1

1.2 Discuss the impact of different types of contract 1

1.3 Analyse terms in contracts with reference to their meaning and

2.1 Apply the elements of contract in given business scenarios 1

2.2 Apply the law on terms in different contracts 1

2.3 Evaluate the effect of different terms in given contracts 1

In addition to the above PASS criteria, this assignment gives you the opportunity to submitevidence in order to achieve the following MERIT and DISTINCTION grades

To achieve M1, you will have participated actively (showing you have done the recommended reading) during in-class discussions.

(Task 5) M2 Select / design

and apply appropriate

(Task 5) D1 Use critical

To achieve D1, you will have evaluated your judgements against existing UK or Commonwealth case law.

(Task 5) D2 Take responsibility

for managing and

(Task 5) D3 Demonstrate

Assignment Brief

Qualification Pearson BTEC Level 5 HND Diploma in Business (Accounting)

Unit number and title Unit 5: Aspects of Contract and Negligence for Business

Scenario – The Car

On 2 September 2016 Tony walked into Car Max in London to purchase a used car He wassurprised to see his sister, Suzi, working there The two had not seen each other in yearsbecause Tony had been traveling around the world

Tony and Suzi sat down and were talking Suzi said that she had been selling cars for 3 yearsnow and enjoys the work Tony said he could use her help After a long discussion, Tony said “Iwould love to get that 2010 Porsche 911 Is it in good shape mechanically?”

Suzi responded, “The car runs like new and you can see it looks amazing! Since you’re only 17,

do you have a driver’s license?”

Tony said, “Yes, here it is Plus, I’ll be 18 in one week You should come to my birthday party.” Suzi said, “Great Well, the car is £30,000 Do you have that much money?”

Tony said, “No, but can I make payments?”

Suzi said, “Yes, it will be £970 per month for 60 months with no money down.”

Tony said, “OK, I’ll take it.”

That day, Tony drove home in his 2010 Porsche 911 He was so happy

One month later, two weeks after his birthday party, Tony received his first notice to make hispayment of £970 He decided that the car was great but, actually, it was not for him Hepreferred to ride his bicycle around and save the £970 per month On 16 September 2016,Tony called his sister to tell her he was going to return the car

His sister said she was not authorized to approve that and Tony must talk with Suzi’s manager,Frank

When Tony called Frank, Frank said “Look, Tony You bought the car already It is yours It

became yours when you took delivery of the car which means when you drove it off the carlot Now, you’re an owner and you must take responsibility for your purchase You must nowpay £970 per month for 60 months.”

Tony is sad and does not know what to do

Task 1 (LO 1: 1.1)

What are the most important elements when determining if a contract exists between twoparties? Which are required? What tests do the courts use for each element to decide if it ispresent?

To achieve D1, you will have evaluated your judgements against existing UK or Commonwealthcase law.

To achieve D2, you will have included evidence of relevant, wide reading of academic sourceswithin your report

To achieve D3, you will have used innovative and creative thought with regards to argumentsand counter-arguments

Evidence

checklist Summary of evidence required by student presented Evidence

Task 1 Explanation of tests related to elements of contract

Task 2 Comparison of types of contract

Task 3 Comparison of different terms of contract

Task 4 Identification of the presence of elements of contract

Task 5 Identification of the presence and impact of implied terms, conditions

and warranties

PRESENTATION

1 The assignment should have a cover page that includes the assignment title, assignment number, course title, module title, Lecturer name, student’s name and student’s ID.

2 This is an individual assignment.

3 You are to submit the assignment in the electronic submission system and also email your report (to Students@JohnMAndre.com ) before the

submission deadline in .DOCX format with the filename 001.docx (where F01-001 is your student ID) Failure to properly submit may cause you to fail all outcomes.

ACNB_A1_F01-4 A fully typed up professionally presented document Use 12 point Calibri font.

5 Your assignment should not exceed 2,500 words in length.

6 Word count limit includes only the introduction, body, and conclusion.

7 Assignment should include an executive summary.

8 The assignment should contain a list of any references used in the report.

9 Use the Harvard referencing system and standard law/regulation/case referencing.

NOTES TO STUDENTS FOR SUMMISSION

• Check carefully the submission date and the instructions given with the assignment Late assignments will not be accepted.

• Ensure that you give yourself enough time to complete the assignment by the due date.

• Do not leave things such as printing to the last minute – excuses of this nature will not be accepted for failure to hand-in the work on time

• You must take responsibility for managing your own time effectively.

• If you are unable to hand in your assignment on time and have valid reasons such as illness, you may apply (in writing) for an extension

• Failure to achieve a PASS grade will results in a REFERRAL grade being given.

• Take great care that if you use other people’s work or ideas in your assignment, you properly reference them in your text and any bibliography.

• NOTE: If you are caught plagiarizing, the University policies and procedures will apply.

1.1 Explain the importance of the essential elements required for the formation of a valid contract

1.2 Discuss the impact of different types of contract

1.3 Analyse terms in contracts with reference to their meaning and effect

LO 2

2.1 Apply the elements of contract in given business scenarios

2.2 Apply the law on terms in different contracts

2.3 Evaluate the effect of different terms in given contracts

Higher Grade achievements (where applicable)

Grade descriptor Achieved ?

(tick) Grade descriptor

Achieved

? (tick)

M1: Identify and apply strategies

to find appropriate solutions

D1: Use critical reflection to evaluate own work and justify valid conclusions

M2: Select/design and apply

appropriate methods/techniques

D2: Take responsibility for managing and organising activities

M3: Present and communicate

appropriate findings

D3: Demonstrate convergent/lateral /creative thinking

Assignment Feedback

Formative Feedback: Assessor to Student

Action Plan

Summative feedback

Feedback: Student to Assessor

Assessor Signature Date

Student Signature Date

FOR INTERNAL USE ONLY

VERIFIED YES NO

DATE :

VERIFIED BY :

NAME :

Contents

Tony is a car purchaser When he make contract with Car Max, he did not know clearly about his contract at all Then, this repost will describe every detail about the contract and help Tony know how to make appropriate solutions

Test of the courts:

 Minor:

- Contract for supply of goods and service for minor is valid and binding if it is

necessaries Minor just has to pay reasonable price, under the price of contract

- In general, contract with minor is voidable It not requires any kind of ratification

and binding until minor repudiates within a reasonable time, or before coming to

18

 People suffering from mental incapacity: Person is incapable of understanding the

nature of the contract and the other party knows this In this case, the contract is

voidable Then, the party facing from mental disability or drunkenness can choose

whether or not to repudiate it

 Corporations:

- Registered companies: Under the Companies Act 1989, a corporation can take

responsible for a contract made outside its stated activities in the memorandum

of association if the other party has conducted in good faith

- Statutory corporations: The statue making each organization will define the

purposes for which that organization may make contracts, and any contract

entered into which is outside those powers can be seemed ultra vires and then,

void

- Chartered corporations: set up by Royal Charter, These organizations have the

same contractual capacity as an adult human being of full capacity Then, can be able to enter into any kind of contract

- Limited liability partnerships: benefit from “unlimited capacity”, so that they do

not raise any problems of capacity in term of contract law

 Agreement which means contain both offer and acceptance

• Offer: An offer is an interpretation of willingness to enter the contract on specific

terms The person who create an offer is called offeror, and the person who receives an offer is called offeree Communication is considered as an offer if it indicates the terms on which the offeror prepare to make a contract, and gives a clear intention that the offeror agree to be bound by those terms if they are accepted by the offeree (Quinn, 2009) For example, Ann tells Ben that she will sell her iPad for $50 So Ann is offeror, and Ben is offeree Also, an offer can be accepted by conducting without further negotiations or discussions demanded, it

is a kind of unilateral contract For example, in the case Errington v Errington

1953, the father bought a house for both of the son and daughter – in – law to

live Subsequently, the father have entered the unilateral contract which cannot

eject his daughter-in-law from the property Then, he cannot revoke it once the couple entered the performance of the act

Test of the courts:

- Offer must contain specific terms

- Offer indicates the terms on which the offeror prepare to make a contract, and gives a clear intention that the offeror agree to be bound by those terms if they

are accepted by the offeree

• Acceptance of an offer is the unqualified agreement to all the terms of the offer

(Quinn, 2009) Acceptance can be expressed by word, action or conduct In

example of Brogden v Metropolitan Railway (1877), the claimants were the coal

suppliers to the defendant railway company for some years Also, the defendant acceptance this agreement without acceptance on the written contract Then, the contract still valid in term of performance Valid acceptance must be

unconditional which means it must adopt the precise terms of an offer (Quinn,

2009) According to TInn v Hoffman (1873) case, one party agreed to sell the

1,200 tons of iron to the other It was held that the other party’s order for 800 tons was not acceptable

Test of acceptance:

- Acceptance must be unconditional to all the term of contract

- Acceptance does not usually take effect until it communicated with offeree



 Consideration:

A valuable consideration as set out in Currie v Misa (1875) In the sense of the law,

consideration may contain either in some right, interest, and profit accruing to the one party,

or forbearance, detriment, loss or responsibility given, suffered or contracted by other A valid consideration must not be past (Quinn, 2009) According to the case of Roscoria v Thomas (1842), the defendant sold the plain-tiff a horse After the sale finished, the plaintiff sued the court The plaintiff cannot be given in return of the defendant’s promise As a result, the consideration was past

Valid consideration must satisfy with the following rules:

- Performance must be legal

- Performance must be possible

- Performance must pass from the promise

- Consideration must be sufficient but necessarily adequate

A valid consideration need not be adequate but it must be sufficient, which means the consideration is something more than the party entered already intended to do Besides,

consideration must be of economic value For example, in the case of Thomas v Thomas

(1892), the plaintiff husband had stated that if he dead before her, she was allowed to

live in his house The widow return a promise by paying £1 a year and keep the house in good repair That is the act of sufficient consideration to make the husband’ promise binding

- Consideration is often divided into two groups: executory and executed

• Executory consideration is exists when the contracting parties make promises to

each other because they are promising something for the future, after the

contract has been created

• Executed consideration: at the time of the formation of the contract, the

consideration performed, executed or acted in return

Test of the court:

- Each party in contract must give up something in return for what is gained from the other party

- Consideration must be sufficient but need not be adequate It means providing

something more than the party involved already intended to do

 Intention to create legal relations:

The concept of contract indicate that the contract become legally binding until the parties involved intend to be so This is strongly presumed in the case of business agreement and agreement of a friendly social or domestic nature There are 2

rebuttable assumption:

- Social domestic and family arrangements considered as not usually intended to

be binding In some case, the courts may not really want to enter with an

example of Balour v Balour (1919) case

- Commercial agreement usually intend to be binding by parties participated, unless, there is very strong contrary evidence, this assumption will not be

rebutted For example of Esso Petroleum Ltd v Customs and Excise

Commissioners (1976) case

Test of the court:

- Social domestic and family arrangements considered as not usually intended to

be binding

- Commercial agreement usually intend to be binding

Task 2 Discuss the impact of different types of contract

There are three types of contract include:

- Valid contract: agreement which legally bindings all parties involved A valid

contract must require those element: capacity, agreement, consideration and intention (Quinn, 2009)

- Void contract: a void contract is not a contract at all, which cannot bound any

parties entered If they transfer property to the third party, they are capable of recover it (Quinn, 2009)

- Voidable contract: a contract which one party may avoid, that is terminate, at his

option The contract is considered as valid unless and until it is avoided Property transferred to a third party before avoidance is usually irrecoverable from that third party (Quinn, 2009)

Apply to scenario:

Valid:

The contract between Tony and Car Max is valid It contain all the required elements: capacity, agreement, consideration and intention Tony is under 18, so

he also capable of entering valid contract Then this contract is valid and

enforceable in a court of law So Tony must keep the car and pay for its price -