Higher National Diploma in Business Management PT

BUSINESS SEMINARS
Unit 5: Aspects of Contract and Negligence for Business

Outcome: 1 Understand the essential elements of a valid contract in a business context

Outcome: 2 Be able to apply the elements of a contract in business situations
Outcome: 3 Understand principles of liability in negligence in business activities
Outcome: 4 Be able to apply the principles of liability in negligence in business situations

TASK 1: Outcomes: 1.1, 1.2, And 2.1

INDIVIDUAL REPORT 18 March 2018

To achieve a PASS Grade, you should be able to do the following:

SCENARIO

You are a solicitor working for a firm which provides a series of seminars for clients wanting to
set up a business for the first time. Your task is to produce a written report, to be given to each
client attending the seminar, setting out in “user friendly” style the principles of law relating to
the formation of a valid contract and their application in business situations.
You have decided to produce the information as a set of questions and answers with an analysis
of several case studies to illustrate the legal principles.

1. What is a contract?

2. What are the essential elements for the contract to be legally binding? Briefly describe
each of the elements.

3. Explain the importance of the following essential elements:

(a) offer and acceptance
(b) an intention to create legal relations
(c) consideration and privity of contract
(d) legal capacity

4. Explain the significant differences between the following types of contracts and discuss
the impact on the parties of those differences:
(i) Standard form contracts,
(ii) Contracts made face to face,
(iii) Contracts in writing, and
(iv) Contracts for distance selling?
5. Case Studies –

A. Is there a valid contract in the following situations? Give reasons for your answers.

(1) Reem writes to Mansoor offering to buy his boat for AED20,000 and says that if she has
not heard from Mansoor within 1 week then she will assume that he has accepted. A
week has passed and Reem has not heard from Mansoor.

(2) Ahmed offers to sell his horse to Shaikha for AED6000. Shaikha says she would buy the
horse for AED4000. Ahmed refuses to sell at that price. Shaikha then says she will pay
AED6000.

(3) On Monday, Amer writes to Maryam offering to sell her a painting. He says he will keep
the offer open until 3pm on Thursday. On Tuesday, Amer changes his mind and sends a
fax to Maryam at 11am revoking the offer. Maryam’s fax machine had run out of paper
and she does not receive the fax until Wednesday. On Tuesday, Maryam had posted her
acceptance of the offer at 2pm.

(4) Fatima sent out a circular to all businesses in the area offering to sell her fleet of
company vans and asks for tenders to be submitted. Mary’s tender is the highest but
Fatima refuses to sell her the cars.

B. What is the legal obligation (if any) in the following situations? Give reasons for your
answers.
(a) Each month, Henry, Kate and their grandson, Sam, enter a general knowledge
competition, each paying AED10 towards the entry fee. Sam always emails the entry
form, pays the entry fee and receives the confirmation of entry. Last month, they won
the competition and the prize was AED 6000. Sam refuses to share the AED 6000.
Advise Henry and Kate.

(b) Mike called the police when he discovered a thief had stolen his car. When they arrived,
he told Reem, the officer in charge, that he would give each of the 3 police officers
AED600 if they returned the car to him by 9am the next day when he was due to go on
a driving holiday. The police officers recovered the car and returned it to Mike by 8am
the next day. Mike has refused to make the payment to the police officers. Advise the
police.

(c) Maitha buys a washing machine as a gift for her mother from Home Supplies Ltd. The
washing machine stops working ten days later. Who can sue Home Supplies ltd for
breach of contract and why?

What has been the impact of the Contracts (Rights of Third Parties) Act 1999 in situations
like this and why?
 (d) Bob borrows money from Fair Bank to set up his own small business, selling fitness
books and equipment which pays for his own lessons to become a fitness trainer.
After a few months Bob’s main supplier finds out he is only 17 and refuses to trade
further with him. This means Bob doesn’t have enough business to pay for his
lessons to become a trainer.
He is also behind with payment of his mobile telephone account.

Advise Bob about the enforceability of each of the four contracts he has entered into:

i. For the bank loan

ii. With the supplier of the fitness books and equipment
iii. For his lessons to become a fitness trainer
iv. For his mobile phone.

M1, M2 to Achieve a Merit Grade, you should be able to:

M1 Show that you have used several sources of information to explain and illustrate the
essential elements of a contract and their significance and demonstrate an effective
approach to study and submit the report on the specified date

M2 Use decisions in legal cases to support the application of legal principles to business
problems and give reasons to justify your conclusions

. D1 to Achieve a Distinction Grade, you should be able to:

Evaluate how well the parties are protected by the application of contract law when dealing
with business problems
TASK 2: Outcomes: 1.3, 2.2, and 2.3

INDIVIDUAL REPORT: To be submitted: 18 March 2018

To achieve a PASS Grade, you should be able to do the following:

SCENARIO

You are a solicitor working for a firm which provides a series of seminars for clients wanting to
set up a business for the first time. Your task is to produce a written report, to be given to each
client attending the seminar, setting out in “user friendly” style the principles of law relating to
the ‘Terms’ in a contract and ‘Exclusion of Liability’ clauses by answering the following
questions:

QUESTIONS:

!A. (i) What is the meaning of the following contractual terms?

(ii) What remedy is available if these terms are broken?

a) Condition
b) Warranty
c) Innominate term

1B. (i) What is the meaning of the following contractual terms?

(ii) What is the result if the terms are put into practice?

d) Force Majeure
e) Price Variation clauses
f) Retention of title clauses

2. Case Study –Exclusion of Liability Clauses

1. Ahmed finds his usual parking place on an empty piece of land has been blocked off.
Instead, he goes for the first time to a car parking building. A notice just inside the
entrance to the carpark states:

‘The company will not be responsible for death, personal injury, damage to vehicles,
or theft from them, due to any act or default of its employees or any other cause
whatsoever.’

Ahmed receives a ticket when he enters the carpark which refers him to the contents
of this notice.
 When Ahmed returns to collect his car, he finds it has been stolen. He goes to report
this to the carpark attendant and is injured when the attendant negligently allows
the barrier to fall on Ahmed’s head.
Advise Ahmed as to the following:

1. What kind of contract term is the notice?

2. Has the notice been incorporated into the contract?
3. What meaning will be given to the words used in the notice?
4. What is the effect on the notice of the Consumer Rights Act 2015?

M1, M2 to Achieve a Merit Grade, you should be able to:

 Show that you have used several sources of information to explain and illustrate the
contract terms and their significance
 Explain the effect of the Consumer Rights Act 2015 on exclusion clauses and give
reasons to justify your conclusions
 Demonstrate an effective approach to study and submit the report on the specified date

.D1, D3 to Achieve a Distinction Grade, you should be able to:

 Evaluate how well consumers are protected from exclusion clauses by the law when
dealing with a business
 Solve the contract problem question demonstrating lateral and creative thinking
Task 3: Outcomes: 3.1, 3.2, 3.3, 4.1, 4.2

3.1 Contrast liability in tort with contractual liability

3.2 Explain the nature of liability in negligence
3.3 Explain how a business can be vicariously liable

4.1 Apply the elements of the tort of negligence and defences in different business situations
4.2 Apply the elements of vicarious liability in given business situations

GROUP SEMINAR AND INDIVIDUAL REPORT: To be presented/submitted on 28 February 2018

OR,

If unable to attend the seminar, a full report to be submitted on 18 March 2018

To achieve a PASS Grade, you should be able to do the following:

You have been asked to contribute to a seminar about the Law of Tort and the role it plays in
business activities. You are part of a team who are identifying and explaining issues from the
basis of tortious liability. In each of the four scenarios (attached) identify what must be proved
to support an action in tort, contrast it with liability in contract law and advise liability in the
particular case.

The team has to allocate responsibility for the content of the seminar between its members but
each member may be questioned on any section of the content. Each member should be
prepared to ask questions during the seminar about the information presented by the other
members of the team. At the end of the seminar you are required to submit your findings on
Moodle and hand in a hard copy of the following:

1) Your presentation notes /report relating to one scenario.

2) Short notes on the content of the other three scenarios
3) Questions to be asked at the seminar for the other members of your team.

If you are not taking part in the seminar, then you are required to write and submit on Moodle a
full report for all 4 of the scenarios.

SCENARIO 1
Ruth went to the ‘Thrills and Spills’ swimming pool with her 4 year old son, Mark. The non-slip
covering on the walkway surrounding the pool was in disrepair. There was a hole in the
covering and Mark caught his foot in it and fell, hitting his head and breaking the kickboard he
was carrying.
Ruth was near the office, which had a notice outside stating ‘NO ENTRY Staff Only’. Ruth saw a
first aid box inside the office. It was fixed to the wall with a faulty clip. Ruth ran inside to collect
the box and while releasing the clip she cut her hand and broke her bracelet.
‘Thrills and Spills’ leased the swimming pool premises from the owner and landlord, Premium
Pools Ltd. The manager of ‘Thrills and Spills’ said the hole in the walkway covering had
appeared only 2 days ago. He said the landlord Premium Pools Ltd were responsible for the first
aid box and had been told 3 months ago that the faulty clip need to be fixed.

Advise Ruth and Mark as to any possible claims they may have under the Occupiers’ Liability
Acts 1957 and 1984 and the Defective Premises Act 1972.

 Can (1) Mark, and (2) Ruth bring a claim against ‘Thrills and Spills’ and /or
Premium Pools Ltd?
 What must be proved under the Occupiers’ Liability Act 1957?
 What must be proved under the Occupiers’ Liability Act 1984?
 What must be proved under the Defective Premises Act 1972?
 Apply these Acts to what has happened to Mark and Ruth.
 What remedy can each of them claim?

SCENARIO 2
Brian is given, by his brother Paul, a new ‘Quality at Home’ brand slow cooker from Best Goods
Ltd. Brian uses it for the first time without any problems. The second time he uses the slow
cooker, he puts it on as per the manufacturer’s instructions and leaves his home to visit a friend.
When he returns, the slow cooker is on fire, which destroys the slow cooker, some kitchen
utensils and the kitchen units. The fire also badly damages the computer he uses for his
business and his flat screen television (worth over £600) both of which had been on the kitchen
units. The kitchen will need redecorating due to the smoke damage from the fire.

Advise Brian whether he can bring an action and what he can claim for:

(1) in contract, and /or

(2) in the Tort of Negligence, and/or

(3) under the Consumer Protection Act 1987.

 Can Brian bring a claim based on contract? Explain liability in contract compared with
liability in tort.
 What must Brian prove if he brings a claim based on the tort of Negligence?
 What must Brian prove to be successful in a claim based on the Consumer Protection Act
1987?
 What are the possible remedies available to Brian?
 Would the manufacturer have any defences?
SCENARIO 3
Home Builders Ltd supplies and fits kitchens and bathrooms. Part of the business involves
manufacturing its own tiles and furniture. Jon is employed by Home Builders Ltd as a wood
machinist operating a bench mounted circular saw. Today, while operating the circular saw,
Jon caught his hand in the saw and severed 4 fingers. At the time this occurred, he had worked
a 12 hour shift and for the last 6 hours of his shift, his supervisor, Murad, asked him to lend his
push stick (which he had been instructed to use for feeding small pieces of wood into the
machine) to a colleague. He was working to complete an urgent job. Joe admitted that he had
been distracted and chatting to a colleague when the accident occurred.

Advise Home Builders Ltd as to its liability in negligence, including vicarious liability and whether
any defences are available to the company.

 What is vicarious liability?

 When is an employer vicariously liable for the actions of its employees?
 What are the 4 common law duties owed by an employer to its employees?
 What are the 3 points to be proved in any claim based on negligence?
 Would Jon be successful in a claim against his employer, Home Builders Ltd, and why?
 What is ‘contributory negligence?
 Would Home Builders Ltd be able to use the defence of ‘contributory negligence’ in any
claim by Jon?

SCENARIO 4
Ready and Co, a firm of accountants and auditors, were engaged to prepare the accounts and
balance sheet for Products for People plc, knowing the accounts were to be sent to Hind, a
private investor, who was thinking of buying shares in Products for People plc. The accounts
were negligently prepared and showed the company as financially stable, even though the
opposite was true and the company had large unpaid debts. Hind showed the accounts to her
friend Imran. Hind bought AED1 million worth of shares and Imran bought AED 500,000 worth
of shares. Within 6 months, Products for People plc went into liquidation and both Hind and
Imran lost their investments.

Advise (1) Hind, and (2) Imran whether they are likely to be successful in their claims in
negligence against Ready and Co and what defences the company may have.

 What are the 3 points to be proved in any claim based on negligence?

 What does ‘pure economic loss’ mean and when can a claim be made for it?
 What must be proved in a claim for ‘negligent misstatement?
 Would Hind be successful in a claim for ‘negligent misstatement’ against Ready and Co?
  Would Imran be successful in a claim for ‘negligent misstatement’ against Ready and Co?
 Would Ready and Co have any defences?

M3 : To achieve a Merit Grade, you should be able to:

 Utilise a range of methods of communicating your evidence at the presentation and/or

in the written report to be handed in, including presenting and submitting the work at
the specified time

.D2: To achieve a Distinction Grade, you should be able to:

 Participate in the group discussion with the other group members at the presentation in
a coordinated and effective way AND/OR show independence in the way you have
prepared the full report

Task Grading Criteria Due Date

Task 1 – Individual report 1.1,1.2, 2.1, M1, M2, D1 18 March 2018

Task 2 –Individual report 1.3, 2.2, 2.3, M1, M2, D1, 18 March 2018
D3
Task 3 – Group Seminar & 3.1, 3.2, 3.3, 4.1 & 4.2, 28 February (seminar) and 18
Individual Report M3, D2 March (report) 2018