Paper Example on Legislation in Business Context

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University of Richmond
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Law is a system of rules prescribed under the authority of the state or nation (Field 2016). In a business setting, commercial laws are bodies of rules applied to the rights, relations, and conduct of firms and persons engaged in merchandising, commerce, sales, and trade (Kolah 2013). Law derives its legitimacy from collectively accepted values such as impartiality of the rules, or the independent power of the parliament or businesses institutions (Barnett 2011). They are various forms of business law that is contracts, the law of corporations and other business organizations, intellectual property, secured transactions, securities law, pension and benefits among others.

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The project will focus on legislation in business context. The first section will address elements, types, and terms of valid contracts used in a business setting. The second segment will elaborate means in which one can apply elements of a contract in various business situations. The third section will discuss the principles of liability due to negligence in business activities. It will elaborate the difference between contracts and tort liability, develop the concept duty of care and neighbor principles in tort negligence and explain instances where businesses can be held vicariously liable due to the negligence of their employees. Lastly, the final division will elaborate the application of principles of liability in different business scenarios.

LO1: Understand the critical elements of a valid contract in a business context

A valid contract is an agreement between two or more parties showing formal commitment to follow regulations. An agreement will only hold as a contract if there is enforcement of law. Contracts are essential in making any deals in a business setting since involved parties must carry out their duties as per the provision of the agreement (Frey 2015). If any of them breaches the conditions of the contract, then the other party is likely to experience undesirable effects.

What are the essential elements of forming a contract? (AC1.1)

The following are the elements of a valid contract.


It is a promise to carry out or refrain from acting as per the agreement with either party in a contract. An offer can be in the form of money or any other valuable in exchange for performance by the other party (Schroeder 2015). Nevertheless, a promise is only considered an offer if the proposing person sends it in the form of a letter, email, or post it on a website. Also, an offer is open to rejection, withdrawal, and revocation but if all parties are mutually satisfied it holds until the expiration of specified period or after a reasonable time elapses.


In a contract, one party must give a bid, and after consideration, the other party should accept the proposal. Acceptance occurs when the wished-for person agrees to have a mutual bond to the terms of the contract. He or she should give an accepted valuable such as money to seal the deal. For an active acceptance to take place, the terms of the acceptance must match those of the offer, and the agreement should be convincing. Therefore, acceptance is an expression of assent to the conditions of an offer.

Intention to create legal relations

It involves entering into a legal binding agreement such that parties getting into the contract are obliged to follow legal arrangements. In most cases, the creation of legal relations signifies seriousness about the agreement (Stasi 2015). If parties fail to honor this element the contract will lack the binding effect and the parties cannot sue each other as their contract is neither enforceable nor legal.


Exchanging promises in an agreement involves giving and receiving pledges. Therefore, either way, the parties involved must obtain a benefit or suffer detriment referred to as consideration in contracts. Consideration must have some value in the eyes of the law and should not be passed unless the promisor had previously requested the other party to provide goods or service as that would be treated as binding. Nevertheless, consideration must be a bargain between the parties entering into a contract.


The law emphasizes that all individuals entering into an agreement must have the capability to do so. Otherwise, the contract will be void. For instance, adults have full capacity to enter into an agreement and enforce them as law. Also, the law excludes minors, mentally incapacitated persons and those under the influence of drugs from entering into contracts.

Privity of contract

It is a legal principle which confers rights and imposes liabilities only to the contracting parties. In this case, the third party cannot sue any party under the terms of the contract. It describes the contractual relationship between the parties to an agreement. Nevertheless, they are exceptional cases. For example, for trust exception, the trust beneficiary may sue the trustee if he or she fails to follow the terms of the contract. Other cases include instances of property exceptions and assignments of contracts.

Freddy vs. Layla

From the business scenario, Freddy is offering a TV set at 145. However, Layla considers the price and offer Freddy 125, but Freddy rejects Laylas offer as he hoped for better offers from other parties. After some time, Freddy writes to Layla stating that he was accepting the 125 over from her. It is evident that Freddy was waiting for a better offer and his silence should not mean that he had agreed to the offer from Layla. For the two to have a valid contract, they must have the capacity to do it that is of sound mind and age. Initially, they only had intentions to get into an agreement which was not formalized. The 145 and 125 are offers from either party, and it took time for Freddy to accept Layla offer as the two have to have an agreement.

2.2 The main types of contracts that may be entered in the United Kingdom (UK) by individuals and businesses. (AC1.2)

They are various types of contracts, and their impacts vary from each other. Though valid contracts have similarities, they differ to address different business scenarios. The following are some of the common types of contract in the UK:

Bilateral and unilateral contracts

Bilateral contract demands that two parties should make promises to each other. The promise made by either party constitutes adequate consideration of the promise made by the other party. On the other hand for the unilateral contract, the promise is made by only one party.

Valid and voidable contracts

A valid contract is that which follows all the requirements of law such that any court can enforce it as per the agreement in the contract. On the other hand, the voidable contract has no legal obligations or rights upon the parties, and therefore it cannot be prescribed by law. Examples of voidable contracts are when minors get involved or instances involving prohibited deals.

Express and implied contracts

In cases, the parties in a contract get a chance to voice their conditions either in writing or orally to each other, this type of agreement will fall under the express contract. A good number of commercial contracts are express contracts. However, at times the work, activities, and duties of certain parties may indicate that they are actually under a contract, then this an implied contracts.

Standard contracts

They are agreements between large enterprises in the world mainly the multinational corporations (Smits 2014). For example, a business in the UK may seal a deal with another firm in Japan to sell their products on their behalf.

2.3 The different terms of a valid contract (AC 1.3)

For one to go into any contract, he or she must have a clear idea and understanding of the content covered in the agreement. It is not advisable to treat all contracts the same manner as some subjects may differ from each other. However, they are some common issues in every agreement such as terms and conditions, warranties, confidentialities, express clause and termination among others

Express terms

They are terms explicitly stated either in writing or orally, and all parties must agree on them. If not fulfilled the innocent party may take action for breach of contract and sue the other party.

Implied terms

They are those conditions put into a contract by courts or statute as they are not explicitly stated in the contract. In most cases, they are assumed visible to both parties.

Innominate terms

It comprises of terms whish are neither conditions nor warranties. One can terminate a contract if breaching of innominate terms is sufficient.


It is the primary term of any contract and if breached the innocent party is entitled to reject the entire contract and claim damages.


They are minor terms of the contract and have no central influence to its existence. In case of breaching warranties, the innocent party may claim damages but are restricted from terminating the entire contract

Exclusion clause

They are written agreement excluding one side of a contract from liability or limiting it to a specified circumstance or condition. However, exclusion clause must be clear, part of the agreement and adhere to unfair contract terms act.

Parties to a contract are bound to only terms and not any other statement made in the pre-contract talk. Clauses reduce risks to a business from lawsuits and misunderstanding of the contract (Walsh 2015). They only hold when the period of the agreement is valid and can subject it to earlier termination as per its terms.

LO2: Application of elements of a contract in a business situation.

1 Draft of a simple contract for the purchase of the products advertised by BellaUK. Include an express term, implied term and one exclusion clause (AC 2.1& 2.2)

Purchase agreement

This purchase agreement is dated 9th March 2017

Between Bella UK



Hair 4 U


In consideration of the provision contained in this Agreement and other valuable contemplations, the parties to this agreement agreed on the following

The seller would deliver to the buyer on or before 10th March 2017 ten boxes of Miracle Oil.

On accepting the delivered goods, the buyer will pay 5 for ten boxes of Miracle Oil paid by cash as per the provision of clause four of the agreement

The seller and buyer acknowledge the sufficiency of this consideration. Also, the prices of the product would be reviewed after the expiry of the promotion period, but ten boxes would cost 10 at most.

The buyer should make payment for the Miracle Oil on delivery.

The oil will be deemed received after the customer affirms that they have received them in the right quality and quantity. The seller will incur the risk of any loss before delivery.

The seller is not responsible for any side effect or damages to the third party.

The Seller may without liability delay agreed on delivery or cancel the contract in occurrences beyond their control such as failure of the source of supply or acts of God.

The contract entails all agreements between the parties and no modification should take place unless it is in written form and signed by both sides. Also, the contract should be binding upon the parties for the next ten years.

Acknowledgment by seller

Signature____________ Date ______________

Acknowledgement by buyer

Signature _____________ Date _______________

Report explaining to Mr. Michael Hair owner of Hair UK explaining (AC 2.3)

breach of a condition

As a producer of Miracle Oil, I understand that we are in a contract with your business Hair 4 U and that we both have an obligation to satisfy our agreement. I recognize that the consequences of every breach will have to affect t...

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