Business Agreement

Business Agreement
Task 1

P1: Explain different types of business agreements and the importance of key elements required for the formation of a valid contract.

Business Agreement

Business Agreement is the mutual understanding or assent of two or more than two legally competent parties. It is done or agreed upon on the relative duties and rights regarding current or future performance. An agreement typicallydocumentsthe give-and-take of anegotiated settlementand a contract specifies the minimum acceptablestandardofperformance.

Types of Business Agreement

There are various types of business agreements depending upon the nature, type and operations / activities of the business. These types can be categorized into following categories based on the above stated criteria.

* General Business Agreements

* Business Employment Agreements

* Leases

* Sales Agreements

The General Business agreements contain Franchise Agreement, agreement with different agencies for advertising, insurance agreements, agreement on not taking legal actions, Settlement Agreement, Stock Purchase Agreement, business partnership agreement, privatization agreement etc.

The different types of Business Employment Agreement are Employment Agreement, Consultancy agreement, Sales Representative Agreement, Employment Separation Agreement, Reciprocal Nondisclosure Agreement etc.

Leases are of different kinds like Real Property Lease, Equipment Lease etc, and same is the case with Sales agreements, it also have different types of contracts and agreements like Bill of Sale, Agreement for the Sale of Goods, Purchase Order, Warranty, Limited Warranty, Security Agreement etc.

Key Elements of Contract

Elements of contract depend on the type and nature of contract, but some elements remain constant in most of contracts. Following are the most common elements of contract.

* An Offer can be defined as “willingness to enter into a bargain so made as to justify another person in understanding that his assent to the bargain is invited and will conclude it [3].

* Acceptance of the terms of offer: Acceptance of an offer can occur in several ways: Acceptance of an offer is a manifestation of assent to the terms thereof made by the offered in a manner invited or required by the offer. An acceptance must not change the terms of an offer. If it does, the offer is rejected. A material change in a proposed contract constitutes a counteroffer, which must be accepted by the other party [4].

* Objectives Purpose: The objective of the contract must be for a legal purpose. For example, a contract for illegal distribution of drugs is not a binding contract because the purpose for which it exists is not legal.

* Mutual Obligation is also known as meeting of minds; mutuality obligation is the agreement of the two parties on a common understating on terms of the contract. Any contract or mutual understanding between parties that differs materially from the original offer is open to legal challenge. Should any component of a negotiation tend toward a final result where a contract or agreement differs materially from the offer, that component of the negotiation should cease. If the component in question is critical to the provision of a service or goods, the issuance of another offer that incorporates that component should be considered.

* Considerations Consideration consists of either a benefit to the persons making promise or a detriment to the promisee. It is a present exchange bargained for in return for a promise. It may consist of some right, interest, profit, or benefit that accrues to one party, or alternatively, of some forbearance, loss or responsibility that is undertaken or incurred by the other party.xxv It is not necessary for a contract to be supported by a monetary consideration.

* Competent Parties: Parties to a contract must be competent and authorized to enter into a contract.

P2: Apply the rules of offer and acceptance in the given scenario, also considering any impact of new technology.

In contract law the offer and acceptance is very traditional and important concept to be considered. The rule of offer and acceptance includes a valid offer, acceptance and communication among the two parties or individuals making the contract is important.

In the given scenario we see the examples of making a contract at two different situations, one at when Mr. John was selected for the post of Assistant Purchase Manager at an engineering company, and was offered at contract to sign by the HR department of that company. The second situation of making a contract is when Mr. John was assigned the assignment of procuring new computer system and he decide to purchase that from “Best Computers”, and signed a business agreement with that company for the supply of new computer systems.

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Following is application of rule of offer and acceptance to the above stated two agreements / contracts.

In both the contracts Mr. John was offered an offer to accept, but in the second case of signing a business agreement with Best Computer the terms and conditions of the contract was not enough clear, and Mr. John sign that without giving proper attention to the all clauses of the agreement, which lead him in big trouble just after few days when the company failed to supply the initial cape of computers on time and most of them were damaged. In this case the problem was not clear offer and acceptance of the terms without understanding the importance of all the terms written in the offering contract. The offer must be unequivocal and direct approach to another party to contract.

P3: Assess the importance of the rules of intention and consideration of parties to the agreement by applying them in the given scenario.

Whenever two or more than two individuals or business groups wants to sign an agreement (both personal and commercial) it is presumed that there is an intention to enter legal relations unless expressly indicated otherwise, and the two parties who denied the intention of creating legal relations must provide the burden of proof for the decision they are taking. While consideration is the price of the other person’s promise.

In business contracts / agreements if you fail to provide consideration you cannot sure on the contract like privately of contract.

In the given scenario the rule of intention and consideration is important because

* If Mr. John is signing a contract with his employers or a business agreement with another business firm, it is required that the performance must be legal and possible.

* While signing agreement with Best Computers the consideration must pass from the promise.

* And considerations must be sufficient but necessarily adequate.

P4: Explain the importance of the contracting parties having the appropriate legal capacity to enter into a binding agreement, taking the job contract of Mr. John as an example.

It is quite important to have legal capacity while entering into an agreement; in case of Mr. John job contract he was offered the job contract by the employer company while he was “late” on replying to job offer latter. In such case if Mr. John was not entitled with the contract he has legal right to go against the organization because the delay in his reply and acceptance latter was not his fault, but that was due to fault in the system. And the employer have also the legal right to respond to Mr. John claim because they didn’t received within due date and time what they were expecting from John. So both the parties have appropriate legal capacity to enter into a binding agreement.

Task 2

P5: Analyze specific contract terms with reference to their importance and impact if these terms are broken using Mr. John’s contract for the purchase of computers as an example.

Following are some of the terms of John’s contract with

* The seller will be not liable for any harm or loss caused by any fault in computer

* A party could terminate the order by providing three days prior notice without incurring any liability for any loss whatsoever.

* Any price already paid by the customer shall be forfeited by the company in case of cancellation of the contract.

All of these terms within the John’s contract with the supplier of computer are of equally importance, because it is the duty of the supplier to ensure that they are providing right computers or any other product and that may not incur any harm to human health, and the providing company should be responsible for any such incident, so this clause must be included in the agreement. Setting proper system for cancelation of contract is also important and was well done during the above stated contract, but keeping some terms hidden from the person who is accepting the contract is not legal, all the terms and conditions included in an agreement must be clear and well defined.


M2: Justify the selection of method/technique that Mr. John should use for the termination of contract with Mr. Bob’s company.

For the case of termination the contract there was a clause in contract to give three days prior notice to other party without incurring any liability for any loss whatsoever. But I think there was lack of honesty on both sides, Bob’s company was not honest enough to make all the terms in contract clear and “visible” for John and also fail to provide right product on right time, and when John decided to terminate the contract the reason was not just the bad quality of the product but also the anger of slippery floor and wounds he got there, and decide to terminate the contract.

I think Mr. John was good enough in his approach to terminate the contract, because the Bob’s company fails to provide the initial delivery on time and also the computers were damaged. The Bob’s company also disguises John at the time when they were signing the agreement by not providing enough information and keeping some hidden terms (written on the back of page) regarding the cancellation or termination of contract. So the way John chose to terminate the contract is right one.

P6: Apply and analyze the law on standard form contracts in the given scenario.

The law of standard form is type of contract which is between two parties who don’t allow negotiations. Like take it or leave it policy.

In the two contracts in the scenario we saw exact example and application of the law of standard form contract when John was about the sign a contract with Best Computer and he object on one clause of the contract that the company will not be responsible for harms caused by fault in computers, and John was told that a leading company in market can’t change this for an individual customer.

P7: Discuss the effect of exemption clauses in attempting to exclude contractual liability in the given scenario.

The exemption clause in the given scenario is not clearly stated and of an ambiguous type, it is very important for any business agreement to have well defined clauses to exclude the contractual liability. In the given scenario especially when John agreed on contract with computer supplier company and the exemption clause was written in small font somewhere at the back of the contract latter and which cause difficulty for John in his company when they decide to terminate the contract when the supplier doesn’t meet their requirements.

Task 3

P8: Describe the nature of general tortious liability comparing and contrasting to contractual liability

Tortious liability revolves around duties fixed by law. Distinguish this from contractual liability where duties are fixed (bargained) by the parties. The courts are clear there is no bar from claiming remedies for breach of a duty and for breach of contract.

Strict liability is liability without fault (was the damage reasonably foreseeable) remember strict liability is not absolute liability and is worth researching some of the law on this area.

M1: Identify and apply relevant theories and techniques to hold Mr. Bob’s company liable.

To keep Mr. Bob’s company liable the management must focus on certain liability theories like Direct Liability, Corporate Negligence Doctrine, Respondent Superior Doctrine, and so many other theories are available for Bob’s company to be liable. I will suggest the Bob’s company to follow the following practices to remain reliable in the market.

* When making an agreement with others, keep all the terms and condition open and visible.

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* Should follow certain health and safety measurements for the liability of their products which will ensure the organisation liability.

* Provide extensive care for the safety of their employees and visitors at their work site.

* They should think of the interest of others, not only for the interest of just their own organisation.

P9: Explain the liability applicable to an occupier of premises in the given scenario.

It is the responsibility of the occupier of premises to ensure the health and safety of the people working there. In the given scenario it was responsibility of the Best Computers to ensure that their offices premises are safe for its workers. The liability applicable in the given scenario will be Direct Liability because the management of Bob’s Company is directly liable for the injuries caused at their premises.

P11: Distinguish strict liability from general tortious liability in the given scenario.

As described earlier that tortious liability revolves around duties fixed by law. While strict liabilityis a standard for liability which may exist in either by a criminal or civil context. A rule specifying strict liability makes a person legally responsible for the damage and loss caused by his or her acts and omissions regardless ofculpability.

In the given scenario the management of Best Computer is responsible for the harms and injuries caused by the slippery floor of their office, and they should also be good enough to consider themselves reliable for the damages or harms caused due the faults in their products.

Task 4

P12: Explain and understand the application of the elements of the Tort of Negligence.

P13: Analyze the practical applications of particular elements of the Tort of Negligence in the given scenario.

Negligence is the failure of organisation management to provide basic care to their employees and other persons at their premises. Negligence occurs when

* somebody does not exercise the amount of care that a reasonably careful person would use under the circumstances;or

* Somebody does something that a reasonably careful person would not do under the circumstances.

There are different elements of Negligence which requires that a plaintiff prove the following four factors by a “preponderance of the evidence”:

1. The defendant owed a duty to the plaintiff (or a duty to the general public, including the plaintiff);

2. The defendant violated that duty;

3. As a result of the defendant’s violation of that duty, the plaintiff suffered injury; and

4. The injury was a reasonably foreseeable consequence of the defendant’s action or inaction.

In the given scenario the negligence is occurred when different people got slipped at office floor of the Best Computers, because they were supposed to provide care and information regarding wet floor and display that for people entering to their office premises.

Task 5


Analysis of findings: whenever there is an agreement between two or more than two individuals or organizations it must be through a valid and proper process and within the principles of contract law, the offer should be proper and valid and same with acceptance of the offer. The two types of contract presented in the given scenario, both are examples of weak contract among two groups or individuals.


I have taken full responsibility of all of the work done, the work done is of my own and I have provided proper references wherever its required, I have taken some of the data from internet, while have done the analysis and study of case study / scenario given and provided the solution to the questions based on scenario in light with two information I gathered from different sources which are stated in references section at the end of the assignment.


I always require creative / analytical and lateral thinking whenever providing solution to a given scenario or case study. It is required to get enough information on the logical terms used in that scenario and then apply those to come up with solutions to the questions.




4. Restatement (Second) of Contracts 50 (1) (1981).





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