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What Constitutes Contract and What Constitutes Agreement

Info: 3572 words (14 pages) Law Essay
Published: 6th Aug 2019

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Jurisdiction(s): UK Law

A valid contract is which of all essential components which present and in which the court would enforce as a legally binding promise. Agreements and contracts are of two different things in knowing first the importance of what a constitutes a contract and what constitutes an agreement. The essential elements required in formatting a valid contract are as follows:

  • Offer and acceptance
  • Consideration- in basis of lawful consideration with a lawful object
  • Free consent
  • An agreement in which it should not be expressly declared to be void
  • Registration and writing in essentiality by law
  • Legal relationship
  • Certainty
  • Capacity of parties to contract- competent parties
  • Possibility of performance
  • Enforceable by law

Offer and acceptance – an offer is something which is being willingly done not capable of doing something with a view of obtaining acceptance by another person. Hence when the offer is being accepted by another person providing the 3 legal requirements for a contract then a legal binding contract would be made. An offer is made by an offeror to an offeree for example in relation to offer and acceptance includes the characteristic between an offer and an invitation to treat just like the case of ‘’Carlill v Carbolic Smoke ball co”.

Acceptance is an offer which could be accepted in any means that creates a legal binding contract in order to provide any prerequisites are being satisfied. There are 3 main rules in order to acceptance they are:

1) Acceptance must be communicated to the offeree.

2) Terms used in acceptance must be matched exactly with the terms of the offer.

3) The agreement must be certain.

For example the case of “Hyde v Wrench (1840) 49 ER 132″.


A contract consists of two parts namely (1) Consideration for the promise and (2) Promise. At the desire of the promisor and the promise has abstained from doing or from make any abstrains from doing or promises such an act is called a consideration for the promise.

Task 01 – LO1.2

Businesses are of different types and have different forms of business contracts being used to execute business transactions today. The different business contracts that will apply to Practically Anything Ltd would be such as marketing and licensing agreements and transactions that include in the selling or using products or services. Secondly employment agreement and thirdly consist of sales contracts. Some contracts are oral whilst others are written basis.

Marketing and Licensing Agreements

This generally allows an agreement in which an individual or a business to market and sell a service or product at a certain incentive price. For instance within a geographic territory business may enter into a marketing agreement to allow another business to sell and purchase items and hence for this the licensing agreement is required as it allows that license to use a services in a certain way. Occasionally licensing agreement permits the license in the form of a trademark or patent therefore when business that uses these trademarks in purposes of advertising needs to operate under the license agreement.

Employee Agreement

Employment agreement is one which enters an agreement between an employer and an employee for the intention of setting up the terms of an employment relationship. The term of this contract would include wages, benefits and the rights and obligations of and between the employer and the employee. This could also be defined as the contract of employment.

Sales Contracts

When two individuals enter into a contract in the purpose of purchasing of buying and selling of goods and where a sales contract is created to setup the price and the agreements of the sale. Theses types of contracts are basically being created by merchants and the buyers and are sold to customers and other different merchants

Business contracts are the important part in conducting business and the operations that take place in business in a wide scale. Contract basics basically keep the work legitimate and protect both parties. It is necessary that both parties agree to the terms and conditions outlined with great acknowledgment with an authentic signature. As today’s transactions are of wide scale and more complex it is helpful in handling contracts in written form between both the parties. Business contracts are of four types created to suit the need and situation they are described below:

Work-for-hire: work-for-hire contracts are hired in the purpose of an outsider contractor is being essential to perform certain tasks in the company. The contractor would be responsible in handling the money he or she makes to the IRS.

Confidentially or Non- Disclosure: in this basis the company’s personal and confidential matters are being hidden confidentially in the agreement of this type of contract the independent contract would be agreeing to NOT disclose any business purpose information or other secrets based on company gain.

Non – Compete: this contract is about stopping the independent contractor from stealing your ideas and competing with the business he will have to address the client as your client and not his make them as his personal clients.

Service Agreement: this contract ensures that both the parties gain their needs commonly among online business services. This should be a legally signed agreement.

Business contracts must be always protected with effective documentation with acknowledgement as the assets and the reputation in the business is essential in the future. Contracts could change over the years yet the bottom line always stays the same.

Task 2

Task 02- Be able to apply the elements of a contract in business situations.

Mr Phipps wants to sell some Gold that his company purchased some years ago. The buyer will pay £1000 per ounce on the 2nd January 2011.

Draft terms to make this contract complete in relation to the sale of the gold.


In order for Mr Phipps to sell some of his gold to the buyer he needs four main elements in order to make his contract to deem it valid.

The first one is which an offer is. The offer is the first start in any dealing from one or more parties entering into a contract. Mr. Phipps is offering some gold to his buyer at the price of £1000 an offer is defined as the price at which Mr. Phipps is offering the buyer and he is willing to buy. An offer is same as asking. Mr Phipps has the offer and then the ‘offeree’ the buyer is looking for the contract.

The second essential element to any contract is acceptance

One of the major role in the part of acceptance is that communication is a must and all terms and conditions should be agreed by both parties before the next step. As communication is essential both parties should be aware of all terms and conditions of the exact situation and be happy to abide by these. In case of any unacceptance in the terms of the contract it could be suitably negotiated and altered in the contract according to both the parties’ convenience. As the acceptance is being made then we could move onto consideration this is when both parties agree and exchange their goods for money, Mr. Phipps selling his gold to the buyer for £1000. The final essential element being the contract created for legal activities they are considered legally valid when they violate existing laws or propose any illegal activities by any means.

Contract for the Sale of Gold is dated of 2nd January 2011 this, by Mr. Phipps and his buyer

Mr Phipps has agreed to sell and the buyer has agrees to buy the Gold as drafted below:

The buyer contracts to buy ounces of gold

The product : Mr Phipps will sell and deliver Gold to the Buyer as drafted below:


99.99% pure





Authentic assay documents


2nd of January ( 2011-01-25)


Selling price quoted

Estimated : per ounce

Transaction price

£1000 per ounce

Payment: mode of payment

Payment will be made in the mode of cash or transferred from buyer s bank account to the sellers bank account in £

Pricing: prices will be in sterling pounds. As agreed the buyer will be paying £1000 per ounce.

Delivery: in terms of delivery it should take place within 30 to 45 days from the date signed or stated.

The seller should also provide the following documents to the buyer with the delivery.

A commercial duplicate invoice signed.

A certificate of origin

Certification report including the verification of the purity, weight and quantity of gold.

A receipt of acceptance of the gold in order to validate the acceptance upon gold by the buyer.

Quality and Quantity: MrPhipps will be ensuring and warranting that all delivery of the Gold would have been completely accompanied by the authentic assay report in order to ensure the purity of metal.

Payment: payment could be made in any modes here the buyer agrees to pay £1000 per ounce to Mr Phipps. Payment should be made with the following documents:

A duplicate commercial Invoice signed

Certificate of origin

Other invoices in case gold is being shipped to another destination

Assay report ensuring the verification of the gold

A certified original certificate validating the price of gold

And a signed receipt of acceptance of the gold.

Agreement: the agreement would entirely contain the understanding of both the parties. This agreement binds to be a contract between Mr Phipps and his buyer and would not be orally changed unless be modified in writing but by executing by both the parties. Therefore in witness both the parties have executed this agreement and obliged to the sale of gold contract.


Standard contracts are forms of contracts contributed towards general conditions of business. It is usually in terms of written form and denotes model contract forms and contracts of adhesion. A contract of adhesion is a contract that varies on a “take it or leave it basis’’ in balancing in favour of one party over the other to obtain the desired product. Standard of contracts that Mr Phipps would use in order to reference the use of invoices are as follows the contractor would be giving over the agreed invoice at intervals agreed by the Authority in the contract. The contractor therefore would ensure the invoice contain all standard terms by terms and conditions on the invoices would bind a contract this is why standard contracts are being made with reference to the use of invoice for a safer and legal dealership between the two parties.

An exclusion clause is a term in which a contract seeks to restrict the rights of the parties of the contract in means of protection. In today’s businesses there are more of liabilities to occur in the company and affect the company directly so in that case to reduce the exposure clauses are being inserted into agreements so that it would help in reducing the liability to a certain extent.

Express and implied terms express terms are terms in which is being agreed by both parties at the time of forming a contract. Every time you give information to your customer about selling the product you become responsible in providing with the specific information and also give the time when the service would take place and its cost for its complete service. Express terms is about expressing all the details of the product to its customer this is how it involoves in seeling to ana individual. Where as implied terms are unquestionable basic qualities of a product or service these are often terms not being mentioned by both the parties instead nonetheless be included in the contract.

A breach of contract is when a party fails to perform his contract. it varies on either actual or anticipatory mode. Remedies are basically could be damages this is the basic remedy for a breach of contract at times they are not adequate remedies but still are equally and would be awarded accordingly. It could be of forms of by nature, remotness of loss, the measure of damage, and penalty clauses. The two equitable remedies available are the specific performance and the injunction.

Negligence is defined as “the breach of a legal duty to take care that results in a damage, undesired by the defendant, to the plaintiff’’ Lord Macmillan in the case of Donoghue v. Stevenson by Winfield. Negligence is usually claimed in the basis of personal injury lawsuits. For example premises liability action in the basis of a firm. For example the case Donoghue V Stevenson 1932 House of Lords in this case a friend of Mrs Donoghue had bought a bottle of ginger beer at a cafe and this has been manufactured by Stephenson and it had some decomposition of remains of a snail and Mrs Donoghue became ill. The plaintiff could claim damages. Torts in apportions to law are of three classes known as the strict liability, negligence and international torts.

The distinction between contractual liability and tortious liability

“Contractual obligations are voluntarily assumed, in that they derive from agreements which individuals are free to make or refrain from making. Tortious obligations arise independently of the will of those involved, and derive from standards of behaviour imposed by law.” By Deakin, S., Johnston, A. & Markesinis, B., Markesinis and Deakin’s Tort Law, (5th Ed., 2003).

Contractual liability differs from tortious liability in this obligations undertaken these contracts are voluntary wise and no one is being forced to enter a contract against their will therefore the parties have the ability to be aware of their liability and the possible consequences to take place in the event of their breach. Tortious liability is particularly imposed on persons and organizations varied on the situation without their knowledge on the potential extent of this liability. Sometimes law is essential required to insurance to protect against claims of liability on negligence or other torts. In cases carried in such as breach of contract claim and negligence actions it is wisely advised that businesses carry insurance for their property and possessions in the event of claim against them. Just like the case mentioned in Grant v Australian Knitting Mills. In this case even a tort claim just like an employee in a firm being injured while using faulty equipment could be able to claim where the claimant has suffered a loss or injury as in Grant; it is in the hands of the claimant to choose each element of his claim the way he selects. The most common relationship amongst these two terms contract and tort clarify drastically in the case of D&D “snail being in the ginger beer bottle” In this situation the case was rejected by the majority with Lord Macmillan on a green argument being that once a contract of sale takes place exists between the manufacturer and the retailer this should be disregarded and the right to make a question would have been if a duty of care existed between the manufacturer and the consumer as to as the contractual duties were owed by other parties became irrelevant as there might have been a reasonable forseeably injury by the negligent actions of the former on the basis on the application of which test.


Task 4- LO4.1

Law of negligence is a legal concept in the common law system mostly executed in cases of torts to accomplish monetary compensation on damages in terms of physical and mental inquiries. Negligence is a sort of tort it is not the same as carelessness, just like the case of Mr Bob Smith being much careful and being aware the capability and yet if it falls below the level of capability expected. He could have been aware of the issues that is to happen yet did not take much of the issues into consideration as he would have underestimated the importance of it. This can be also defined as conduct as to it fell off and to protect him from a foreseeable risk of harm would or could have done to protect him.

“those who go personally or bring property where they know that they or it may come into collision with the persons or property of others have by law a duty cast upon them to use reasonable care and skill to avoid such a collision.( Fletcher v Rylands ([1866] LR 1 Ex 265)”.

In the event of a injured person proving that another prove person acted negligently to cause his injury could compensate and recover damages for his farm in the form of civil litigation. Mr Bob providing a case for negligence can substantially entitle for the injured caused by negligent fall of the tea improperly being stacked to compensate for the harm and dangerous injuries and damages caused to him. However in the case of negligence cases should be of specific facts damages resulting should be proven in order to compensate in an action of negligence.

Elements of negligence claims

There are certain elements needed to be established in every negligence case they are as follows: duty, breach, causation and damages.

Duty of care

In this case it is found that the fault of principle lying around illustrates the law of negligence. Lord MacMillan illustrated a new classification of delict which is equivalently nearest of tort and “implied as a warranty of fitness of a product’’ in a different part of tort- “products liability’’.

Breach of Duty

All members of society equally have exercise reasonable care towards others and their property and hence a breach of duty is not being limited to professionals or oral contract. In this conduct the defendant is not negligent if the damage to the plaintiff was not a reasonable foreseeable consequence. As the improper stack of tea bag fell while working his shift in the warehouse. Reasonable risk cannot be judged with the advantage of the knowledge of hindsight.

Factual causation

The cause of injuries and damages sustained by Mr Bob should be shown that the particulars were the cause for the defendant to be liable. The basic way in order of addressing is by asking if the injury would have occurred before and the company had the breach of duty owed to the injured party. Breaching party could be sued for the value of harm based in the case if the breaching party materially increased the risk of harm to another.

Legal causation

As Mr Bob was being harmed badly he could claim under the negligence of law in his company the company can argue that it should not be liable in terms of law because the fact that Mr Bob was being employed as an employee to the company who was being negligent his negligence was too remote for his injury. If the reason of harm was foreseeable then the company owed a duty of care and hence here there was sufficient casual proximity held.


As a general rule Mr Bob can rely on a legal remedy in the point he proves that he has gone through a dangerous injury. In breach of duty and the harmful cause of injury to Mr Bob, a plaintiff will not be able to recover unless he could prove the defendants breach caused a dangerous injury. Damages are not being essential elements needed in order to progress his case perhaps he would be entitled to prove and claim damages to his injuries. In the event of injury proved Mr Bob could claim under negligent act under certain circumstances.


Damages are being replaced in terms of monetary value for the harm done. Mr Bob would be awarded for the damages caused to him in the case of negligence act such as compensatory damages so that it would compensate for the pain and suffer caused to Mr Bob. This is to put back Mr Bob back in his original position before the happening of the negligent act.

These are the basics of the law of negligence and the view in which the company would settle the case in the form of negligent act.

http://www.answers.com/topic/vicarious-liability IMPORTANT

Mr Phipps warehouse while being re-decorated by Super painters Ltd, One of the Super painter’s employees knocked over a ladder which on falling over broke a window and table. The asset of Mr Phipps has been damaged due to a result of accident and also human neglect by one of the employees of Super painter’s Ltd. In result of human negligence the accident occurred. The party responsible for the damage is known as the defendant and Mr Phipps is the injured party in this case. If the plaintiff (Mr Phipps) proves that the damages are being caused due to human negligent then the defendant (Super painters) at fault will have to pay a part a nominated amount of cash to cover the damaged window and table. Hence this is termed as a property damage liability.

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