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Different Type of Contracts and Essential Elements

Info: 2711 words (11 pages) Essay
Published: 16th Aug 2019

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Jurisdiction / Tag(s): UK Law

A contract is usually an agreement between two or more parties; the condition is that it should contain the elements of a valid legal agreement given by the law or by the binding arbitration. That why it commonly says that a contract is an exchange of promises.

Agreement is said to be done when an offer which is capable of immediate acceptance has been accepted. The parties which are involved in the contract must have the valid capacity to contract.

Types of business contracts

There are mainly two types of contracts

Bilateral business contracts and

Unilateral business contacts.

Bilateral Contract

A bilateral contract is that kind of contract in which the most people think of when they think about the contract. A bilateral contract is an agreement in which all of the parties to the contract make promises to the other party. For example, in a contract for the sale of a property the buyer promises to pay the fixed amount according to the deal and in exchange for the seller promise to give the property including the title of the property.

Unilateral contract

Unilateral contracts that contract in which only one party makes the promise with the other party. The other party does not involve in the promise of the contract. The most simple example is the reward contract in this x party promises to pay a reward to the y party when the party will find the lost thing of the party X. here the Y is not involved in any promise but the Party X is involved in the promise to pay the reward to the party Y.B is not obliged to find A’s dog, but A is obliged to pay the reward to B if B finds the dog.

In this way there is indolent of the one party in the unilateral business contract.

Essential elements of a valid contract

There are generally six elements of a valid contract:

1. Agreement- in this element there is concept of offers and acceptance.

2. Considerations- deals with the money matters.

3. Capacity to contract- to check the validation of the contract that contract must not be the minor and has the proper validation for acceptance.

4. Geniuness of Assent- ensure that the both parties seriously involved in the contract.

5. Lawful purpose- the contract must be of legal use in order to be a valid contract.

6. Lawful Form- in the writing form according to the law.

After considering all these requirements the contract is termed as the valid and legally acceptable in the term of business.

1b) Case study

As the manager of the hotel I will perform the duty according to the legal requirements in any case. In the case of advertise holiday booking the following legal positions will come into effect.

Formation of a Valid Contract

Postal rule

In the postal rule the contact is complete when the acceptance is send.

Instantaneous mode

In instantaneous mode the Contract is complete when the acceptance is received by the offeror. And the A Contract is made where the acceptance is received.

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This is the additional requirement before the contract becomes complete and there is the confirmation of receipt of acceptance by the suppliers or sellers.

By following the above rules the advertisement plan come into consideration for the Hotel.


Intention to create legal relations


According to the requirement for the creation of the legal relation in contracts the law is mainly aimed at the sifting or settle out the cases which are considered to be not appropriate for the court action. This is not necessary that the all agreement is bound to the court which can be enforced through the court. For example if someone has lend anything from his friend and ask him to give it back on that particular day in that case there is no legal duty to do so it is only the moral duty to complete his promise to gave back ones thing . In this way there are some agreements which are not bound to the law but according to the wish of the party.

So in that case In order to determine which agreements are legally binding and have an intention to create legal relations, the law tries to make an assumption between the social and domestic agreements and agreements made in the commercial and business contexts.

Intention to create the social and legal acceptance

In the social and the domestic elements the law give the presumption that the parties does not need to create the legal relations with each other.

This presumption can be considered by the evidence which may consist of a written agreement included that where the parties have separated and the where is the third party to the aggrement.

Intention to create legal relations in commercial and business agreements

The agreement which is related to the commercial and business context, the law suggest a presumption that the parties have to create legal relations by the agreement:

This presumption is further given by the proof to the contrary i.e.

Binding should be honour to the clauses only,

There should be notice of the difference with the comfort letters.

Importance of the consideration in the business contracts

“The doctrine of consideration is too firmly fixed to be overthrown by a side-wind.”(Lord Justice Denning)

Under the common law consideration is the price of the promise and is a requirement for the contracts. Some common law and civil law does not require any consideration, but on the contrary some taken it as necessary.

The main thing of consideration is that both the parties which involved to a contract must give something to the bargain. A contract must show that it will give some benefit that is recognized by law. For example, the money is recognized as the part of the consideration.

2a) Breach of warranty

Breach of warranty is that which gives the warranty of repair exchange or maintenance of the goods supply to the suppliers. This is a legal contract between the two parties. This is signed by the providers and as well as the buyers. A warranty is a less important term in the business contracts as it does not go to the root of the contract. A breach of warranty has only give the injured party the right to claim damages, the contract cannot be repudiate.

2b) case study of the Hotel

As the agreement was signed by the previous manager the contract has signed with the acceptance of all the terms of contact. Also there is mention of no warranty for the product which is written in very small printing that any express or implied condition or warranty is hereby excluded and this agreement is dully signed by the previous manger and as a result according to the legal acceptance the company will not going to provide any maintenance to the damaged machine. They do not have any legal document to claim the breach of warranty in this particular case.

2c) Exclusion and limiting clauses

The reasons of inserting a clause in the contract are that it limits the one party liability to breach of contract or negligence. A party rely on these clauses when it has been encountered in the contract and as the issue of the interpretation its validity can also be tested under the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999.

Incorporation of the exclusion

Before rely on any clause it has been cheeked that the whether it is the part of the contract or not.This is incorporated in the contract by the means of the signature, notice and the course of the deal. The following are the means of clauses in the contract.

1. Signed document

2. Unsigned documents

3. Previous dealings

4. Privity of contract

5. Collateral contracts

6. The battle of the forms


1. Contra Proferentem

2. The Main Purpose Rule

3. The Doctrine of Fundamental Breach

The Unfair Contract Term Act 1977

3a) Explain similarities and difference between the tortuous and contractual liability

Definitions of tortuous and contractual liability

Tortuous liability TORT “Tortious liability arises from the breach of a duty primarily fixed by law: this duty is towards persons generally and its breach is redressible by an action for damages”

This term is arises from the breach of duty which is primarily fixed by the law. This duty is related to the person generally and its breach is considered by the action or damage involved.

General Characteristics of Tortious Liability

Liability usually arises due to a wrong act or omission.

Generally, the Tortious liability that which caused due to the fault of the defendant…

Contractual liability

Contract “Most contracts take the form of an agreement; that is to say, each party agrees to accept the promise or promises of the other in return for the promise or promises made by it”


Both create the civil law obligation.

Both have the breach which gives rise to an action for damages.

Both the contract and tort claims can be hear in the civil court


1. According to the general rule contractual obligations are voluntarily undertaken but in law of Tort there is no such free choice usually law imposes the obligation.

2. In a contractual obligation the person owes only a duty to the other party to the contract but in tort owes duty does not allow everyone to use violence against them.

3. As the liability in contract is strict. While the tortious liability is only based on fault.

4. The contractual liability is imposed on that person who did not do what he promised to do. On the other hand the tort imposed on someone has failed to do something he promised to do.

3b case study

As the guest was injured due to heavy snow over the hotels path and wish to claim the damage from the hotel. In this case according to the law of occupier liability act 1957 which implies that occupier is that person who has the full control over the premises and this is the duty of the occupier to care all lawful visitors according to this law this is responsibility of the occupier to take care of all the visitors, children and guests to provide the safety means to access

Hence the common duty of the owner is a duty to take such care in all circumstances which ensures that the visitor is safe in using the premises for the purpose which they come to visit there.

3c) Vicarious Liability

“The tort doctrine that imposes responsibility upon one person for the failure of another, with whom the person has a special relationship (such as parent and child, employer and employee, or owner of vehicle and driver), to exercise such care as a reasonably prudent person would use under similar circumstances.”

Vicarious liability is regarded as those legal doctrine which assigns liability for an injury to that person who did not cause the injury but who relates legally to that person who did act negligently. It is also known as the imputed negligence. These legal relationships include the relationship between parent and child, husband and wife, owner of a vehicle and driver, and employer and employee.

4a) Introduction to Negligence

“Negligence is the omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do.” (Per Alderson B., Blyth Birmingham Waterworks Co., 1856)

Elements of negligence

Negligence is most usefully comprised of five, elements:

1. Duty

2. Breach

3. Cause in fact

4. Proximate cause

5. Harm


Duty is regarded ad the obligation of one person to the other in the areas of social customs, philosophy, and religion. Duty is regarded as that thread which binds the humans with each other in the community. In the case of serving as the basic element of the negligence claim duty is the main provider for the main door to recovery. According to the principal cause of action in the law of tort all the negligence claims must pass through the “duty portal” that is used to bounds the scope of tort in the case of recovery for accidental harm.


Breach as the element of tort which is considered as itself the misconduct. This is the defendant’s improper behaviour or omission. As the breach of duty this element has pre existing standards in order to control the behaviour.


There are some problems which are more complex with more illusive solutions than that of the causative. In that case the causes and effects of actions, individuals choice to act and biological activities are involved in this area can be handled in certain ways. There is a common saying for the cause in fact which says “The attraction of causes is as magnetic for people as flames are for insects, and it is frequently as deadly.


This clause is linked with the cause in fact. But it is a separate element of the tort of negligence. The issue of one cause is different to the other cause. The proximate cause gives the link between the defendant’s breach of duty and the causality’s injury. This cause find out the thing that the injury is caused of which like whether in logic, fairness, policy, and practicality.

More widely this cause is regarded as the doctrine used to serve in order to limits the consequences. This is not a remote connection. This is usually determined over the facts of each case.

Proximate cause known by a variety of names.


This is the last element of a negligence claim. The damage of a

Plaintiff suffers as a proximate result of a defendant’s breach of duty. This requires the defender to provide the compensate to the person for the harm.

Conclusion- Negligence is the common for the legal claims which is comprised of various elements which together make the analyse of the problem and try to solve that problem according to the legal requirements. While considering the elements the ideas come to the surface for resolution. They proceed logically to reach the result for the any kind of breach which in turn is very useful for the process of handling the situation.

4b Case Study

As Mr. and Mrs. Camelot booked a weekend holiday in the hotel they found that there are no good services like there is poor heating and a caterpillar found in the food. All these things according to me are very bad for the hotel as this kind of mishaps leads to the many problems in the future. There is a lawful offence regarding the health care of the customers. For this the possible legal liability is Liability for Misrepresentation

In which excludes or restricts liability for misrepresentation is ineffective unless it does not satisfies the requirement of reasonableness and there are several mishaps regarding the facilities provided in the hotel.


From the above discussion it is clear that the common law management is crucial part of the business as the business must have the legal acceptance in order to avoid the future problems that can arise. This covers the all legal aspects and valid terms of contracts including the different type of contracts. In addition it also covers the areas of liabilities, tort of negligence and various case studies in order to take the decisions for the company to maintain the legal requirements. It also clears the concept of vicarious, tortuous and contractual liabilities of the contract.

As the business requires all aspects to be perfect for the smooth run of the business. This can only be done with the common law implications.

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