ACNB A1 F08032 Business law

Banking Academy of Vietnam
Assignment Front Sheet
Qualification

Unit Code / Unit number and title

Pearson BTEC Level 5 HND Diploma in Business
(Accounting)

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

Student name (vn)

Student name (en)

Student ID

Assessor name

Phạm Gia Khánh

Kevin

F08-032

John M. Andre

Date issued

Hand in deadline

10 September 2016

To be determined

Assignment title

Submitted on

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.

Learnin
g
Outcom
e

LO1

LO2

In this assessment you
Learning Assessmen will have the opportunity
outcome
t Criteria
to present evidence that
shows

are able
to:
Explain
theyou
importance
of the
Understand
the essential
elements of a
valid contract
in a business
context

Be able to
apply the
elements of a
contract in
business
situations

1.1

1.2

Tas
k
no.

essential elements required for
the formation of a valid contract

Discuss the impact of different
types of contract

Evidence
(Page no)

1
1

1.3

Analyse terms in contracts with
reference to their meaning and
effect

1

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

Student declaration
I certify that the work submitted for this assignment is my own. I have clearly referenced any sources
used in the work. I understand that false declaration is a form of misconduct.

Student signature:

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In addition to the above PASS criteria, this assignment gives you the opportunity to submit
evidence in order to achieve the following MERIT and DISTINCTION grades
Grade Descriptor
M1 Identify and apply
strategies to find
appropriate solutions

Indicative

characteristic/s
An effective approach to
study and research has been
applied.

Contextualisation
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
methods / techniques

M3 Present and
communicate
appropriate findings

The appropriate structure and
approach has been used.

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

Self-criticism has been shown
regarding analysis and

recommendations.

D2 Take responsibility
for managing and
organising activities

Activities have been
managed.

D3 Demonstrate
convergent / lateral /
creative thinking

Innovative and creative
thought have been applied.

To achieve M3, you will have presented
the report in a professional manner
(proper formatting, proper use of
referencing, depending only on accepted
academic references and avoided
referencing any public websites, using a
proper structure, using persuasive
arguments, etc.) and appropriate for
those familiar and unfamiliar with the
subject of contracts.

(Task 5)
To achieve D1, you will have evaluated
your judgements against existing UK or

Commonwealth case law.

(Task 5)
To achieve D2, you will have included
evidence of relevant, wide reading of
academic sources within your report.

(Task 5)
To achieve D3, you will have used
innovative and creative thought with
regards to arguments and counterarguments.

(Task 5)

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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

Assessor name

John M. Andre

Date issued

10 Sept 2016

Hand in deadline

To be determined

Assignment title

Contracts

Scenario – The Car
On 2 September 2016 Tony walked into Car Max in London to purchase a used car. He was
surprised to see his sister, Suzi, working there. The two had not seen each other in years
because 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 years
now and enjoys the work. Tony said he could use her help. After a long discussion, Tony said “I
would 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 his
payment of £970. He decided that the car was great but, actually, it was not for him. He
preferred 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

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became yours when you took delivery of the car which means when you drove it off the car
lot. Now, you’re an owner and you must take responsibility for your purchase. You must now
pay £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 two
parties? Which are required? What tests do the courts use for each element to decide if it is
present?
Task 2 (LO 1: 1.2)
Explain the differences between the following types of contract and how they each could
impact The Car case.
•

Valid

•

Voidable

•

Void

Task 3 (LO 1: 1.3)
Explain the similarities and difference between these three terms of contract:
•

expressed orally

•

implied in law

•

implied by trade usage

Task 4 (LO 2: 2.1)
Identify if all the necessary elements are there in The Car case above to form a contract. Show
how the tests you included in Task 1 would be applied to this case.
Task 5 (LO 2: 2.2, 2.3; M1, M3, D1, D2, D3)
Identify what implied terms are present in The Car case. What is the impact of these implied

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terms?
Identify what conditions or warranties exist in The Car case. What is the impact of these
terms?
To achieve M1, you will have participated actively (showing you have done the recommended
reading) during in-class discussions.
To achieve M3, you will have presented the report in a professional manner (proper
formatting, proper use of referencing, depending only on accepted academic references and
avoided referencing any public websites, using a proper structure, using persuasive arguments,
etc.) and appropriate for those familiar and unfamiliar with the subject of contracts.
To achieve D1, you will have evaluated your judgements against existing UK or Commonwealth
case law.
To achieve D2, you will have included evidence of relevant, wide reading of academic sources
within your report.
To achieve D3, you will have used innovative and creative thought with regards to arguments
and counter-arguments.

Evidence
checklist

Summary of evidence required by student

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

Evidence
presented

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 ) before the

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submission deadline in .DOCX format with the filename ACNB_A1_F01001.docx (where F01-001 is your student ID). Failure to properly submit
may cause you to fail all outcomes.
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.

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Achievement Summary
Qualification

Pearson BTEC Level 5 HND
Diploma in Business (Accounting)

Assessor
name

Unit Number
and title

Unit 5: Aspects of Contract and
Negligence for Business

Student name

Criteria
Reference

John M. Andre

To achieve the criteria the evidence must show that
the student is able to:

Achieved
?
(tick)

LO 1
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

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

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Achieved
?
(tick)


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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

DATE

YES

NO

: .................................................................

VERIFIED BY : .................................................................
NAME

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Contents

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Introduction

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.

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Main Body
Task 1. Explain the importance of the essential elements required for the formation of a
valid contract:
- Contract is defined as the agreement which binding parties involved legally. There
are three types of contract include: Implied, verbal, and written contract. A
contract is considered as valid until it have these essential elements below:
• Capacity:
• Agreement: offer and acceptance
• Consideration
• Intention to create legal relations.
 Capacity:
The parties participated in the contract must be able to create a legal relationship
between them (Quinn, 2009). Some groups have limited proportion to create valid
contract, because they may not in capable of fully understanding the contract they have
involved. The main parties include: minors; people suffering from a mental incapacity;
and corporations. (Quinn, 2009)
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.

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 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.



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 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:

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-

-

-

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:

-

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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.

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-

-

Void contract:
The contract of Tony may be missing one or all of the required elements needed
for a valid contract. This contract has no effect in a court of law and
unenforceable in a court of law. The contract between Tony and Car Max is void.
Then, at the time Tony make contract, he is a minor, so he may be too naive and
unlikely to have comprehended about the term of contract. The Suzi’s manager,
Frank may exploit the naive of Tony, persuade him to pay the price of the car:
£970 per month for 60 months. However, the price is undue influence for Tony.
So the contract would be unenforceable, then Tony can terminate it. That means
he must return the car and not have to pay.
Voidable contract:
The contract between Tony and Car Max is voidable contract. Because it is
created within Tony’ minority time. So the contract has all the necessary
elements: capacity, agreement, consideration and intention to be enforceable by
the court of law. Therefore, Tony must terminate the contract based on his
option.

Task 3. Analyse terms in contracts with reference to their meaning and effect
The terms of contract present the duties and obligations of each parties under
the contract.
The similarities and difference between these three terms of contract:
- Expressed orally
- Implied in law
- Implied by trade usage
 The similarities and difference between terms expressed orally, term implied in law
and term implied by trade usage.

• Similarities
- All type of terms are not laid down in the contract.
- Created by intention of parties into contract.
- Can imply to the same type of contract. With regard to Term implied by law,
courts will imply the term which is necessary incident. Then, such terms can be
implied into the future contracts of same types.
- Term implied in law and term implied by trade usage imply in particular types of
contract. Besides, both type of terms are implied which not expressly mentioned
in the form of the contract. Representation of intentions of the parties in the
contract.
•

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•

Differences:

Term expressed orally

Term implied in law

Term implied by trade usage

Both party agreed to enter into
contract through negotiations.

For example, in Bannerman v
White (1861), White
emphasized for the seller that
the hops should not have been
treated with Sulphur adding
that, if they had, he would not
bother to ask the price. Then, it
turn out to be term of contract.

Term implied without expressly mentioned.
Regardless whether or not the parties want
them (Quinn, 2009).

Term implied without expressly
mentioned. Regardless whether
or not the parties want them
(Quinn, 2009).

Can be able to present in every
type of contract.

Presented in certain types of contracts. For
example:
- In case of Liverpool City Council v.
Irwin 1977, tenancy agreements will
include implied term that the
landlord must take reasonable care
to keep parts of property in good
repair.
- Under the provision of Sale of Goods

Act 1979, sale of goods to customers
will have implied term that goods
must have satisfactory quality.
- Contracts of employment include
implied term that employer will offer
departing employee a job reference
(Spring v. Guardian Assurance plc
- (1994)) and implied term that
employer and employee will not act
in ways “likely to undermine the trust
and confidence required if the
employment relationship is to
continue” (Malik v. Bank of Credit
and Commerce International SA
(1997)). Cf. Crossley v. Faithful &
Gould Holdings Ltd. (2000).
-

Implied in commonly terms by
trade usage. In the case of
British Crane Hire Corp. Ltd. v.
Ipswich Plant Hire Ltd. (1975).
The owner of a crane hired it to
a contractor, who was entered
into the same sort of business.
Then, terms frequently used in
contracts can be implied into
other such contracts.

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Task 4. Apply the elements of contract in given business scenarios
Element of contract
-

Offer
Offer must be specific.
Offer indicates the terms of contract, and
gives a clear intention that the offeror
agree to be bound by those terms if they
are accepted by the offeree.

Acceptance:
- Acceptance must be communicated.

-

Intention to create legal relation:
- Social domestic and family arrangements
considered as not usually intended to be
binding.
-

Commercial agreement usually intend to
be binding.

Capacity: In case of minor, contract with minor is
voidable. If contract for supply of goods or services
is necessaries. It will be valid contract.

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In case scenarios, Suzi is offeror and Tony is offeree.
- The car runs like new and it looks amazing.
- The terms of contract for Tony is he must
pay £970 per month for 60 months with
no money down.
- Suzi is a representative of Car Max. Then,
Suzi is likely to help Tony choose the right
car with appropriate price.

-

Acceptance must be unqualified to all the
terms of the contract.

Case

-

When Suzi offer to sell the car. She and
Tony have communicated carefully in order
to create a contract.
Tony must pay exactly £970 per month for
60 months with no money down.

-

Suzi and Tony have family relations.

-

The contract between Tony and Car Max is
commercial agreement, so it intend to be
binding.

The contract that Tony entered with Car Max is
voidable contract because it is made during his
minority. However, the car is necessary goods
because it satisfy the demand of travelling and
working for people. The Porsche is considered as
reasonable car because of its professional function in
travelling and racing. Since, Tony is 17 years old and
has license driver required. Besides, he had been
travelling around the world, so the Porsche will be
necessary for demand of Tony for travelling. I
Then, the contract turn out to be valid.

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When contract is made, Tony provided a promise:
“OK, I’ll take it”. That means he agreed to be bound
by the term: “pay £970 per month for 60 months with

no money down”.

Consideration
- Consideration is provided by both sides.
- Consideration must be sufficient but not
be adequate.

Task 5
Implied terms are present in The Car case include:
Implied Term

Case study

Term implied
by facts

Terms are not laid down in the contract, but both parties intended to include
if they thought about it (Quinn, 2009). Based on Business efficacy test, term
must be implied to make contract work. So, Tony must follow the implied
term to make the contract work efficiently. In this case, Tony must pay £970
per month for 60 months with no money down. Terms of the contract will
not imply if one of the party unaware of subject matter of suggested term to
be implied. So, although there are no written contract, Tony must aware of
term (£970 per month for 60 months with no money down) of contract. He
must pay the price of the car as contracted before.

Term implied
by law

Under Sale of Goods Act 1979, goods for sale must have satisfactory quality.

In term of minors, good must suitable with conditions in life of them and
they just have to pay reasonable price for it. The goods is a 2010 Porsche
911, which runs like new and look amazing. (Scenario, 2016). Besides, Tony
has a driver’s license, then the car may suitable with his condition. When
Tony made contract with Car Max, he was a minor. So he just has to pay
reasonable price, which not need be contract price.



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 Conditions or warranties exist in The Car case.

Condition is the most important terms of contract. If it is breached, it lead to significant
consequences for innocent party (Quinn, 2009). They can repudiate the contract and sue
for damages. Certain term are able to be considered as conditions. For example, The Sale
of Goods Act 1979 stated that certain terms relating to title to goods and their quality
are regard to be conditions. In the Car case, the term in contract of buying the Porsche is
considered to be condition. Because it indicated fully about detail of the car: 2010
Porches 911 version, it runs like new and looks amazing. Besides, it presented the price
of the car which is £30,000. About the payment, Suzi indicate that it will be £970 per
month for 60 months with no money down. Then, if the term is breached, it give
significant consequences for innocent party. When Tony does not make payment of £970
for the first month, and want return the car so Tony has breached the contract. It lead to
significant consequences for Car Max. So Car Max Company can sue for damages with
Tony.

Warranty: describes a contractual term that can be broken with not significant important
consequences. When Tony consider to buy a used car, Suzi stated that is runs like new
and looks amazing. It becomes a warranty of contract. So when Tony suffer damages like
accident, or break down, he can sue for damage but cannot breach the contract.

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Conclusion
From my analysis about term and element of contract between Tony and Car Max. Tony
can has more knowledge about his circumstance.

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Reference
1. (Quinn, 2009)

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