Aspects of Contract and Negligence for Business Q

There are two tasks in this assignment.

Within task one there are four questions on a single case study. Within task two there are three tasks each with a separate scenario/case study.

The first two learning outcomes are covered in task one and the second two learning outcomes are covered in task two.1. Understand the essential elements of a valid contract in a business context 2. Be able to apply the elements of a contract in business situations

3. Understand principles of liability in negligence in business activities 4. Be able to apply principles of liability in negligence in business situations

TASK 1: Elements of a contract CASE STUDY

PRIMARK Direct supplies Auto parts and paints to retailers and required new check-out systems and software for faster check-out to its customers as well as improved stock management of its wares. This was to improve service delivery to its cherished customers.

PRIMARK Direct issued a tender and a number of well-known Information Technology (IT) companies pounced on the tender to provide these computers. After evaluating several key suppliers, PRESEC Pacesetters appeared to offer the best solution. PRIMARK Direct then continued a series of detailed discussions with PRESEC PACESETTERS.

PRESEC Pacesetters supplied a number of quotations, its final one (quotation NUMBER 222) included a full description of the project, standard terms and conditions, timescales, pricing and payment schedules:

PRIMARK Direct replied with the following: We are generally happy with your final quotation NUMBER 222 subject to a few Conditions:

1. The total price of £1.3m and the payment schedule are agreed. 2. This is subject to a formal contract being agreed in the near future. 3. The contract is not effective until both parties have signed the formal contract.

4. We agree to reimburse all legitimate expenses if a formal contract cannot be agreed.

In response, PRESEC Pacesetters sent an email confirming acceptance of the main contents of the letter but the email also said:

'Should a formal contract not be agreed, we reserve the right to claim not only our legitimate expenses but also to claim a reasonable amount of the profit we would have made had the contract been finalised.'

Work commenced and a draft final contract was prepared by PRIMARK Direct but never signed. Both parties continued to work on the contract and PRIMARK Direct made the early stage payments.

Software Sub-contract PRESEC Pacesetters operated as the main contractor but needed to sub-contract some of the software work to Jango Solutions Ltd. Jango Solutions had been recommended by PRIMARK because it had previously worked on PRIMARK's software systems and usually worked to a high standard. There were few issues to date with the software that Jango Solutions Ltd had previously installed.

From the outset, Jango Solutions Ltd had trouble making the new software compatible with the old software. The new software was creating problems for the existing systems. Jango Solutions constantly needed to review and update the new software. The compatibility problem between the old and the new software inevitably led to delays to the whole project.

Once the software had been installed, it continued to suffer from major problems. Some of these problems led to the system crashing and some loss of data. PRIMARK Direct finally lost faith with the software and decided to engage another contractor (MANET) to solve the software issues.

MANET managed to retrieve the lost data and ensure the compatibility of the software.

The contract between PRESEC Pacesetters and Jango Solutions Ltd contained the following clause:

'No other party other than PRESEC Pacesetters and Jango Solutions Ltd has any right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of these Terms and Conditions.'

PRIMARK, having paid a considerable sum of money to fix the software faults is keen to recover the money. It is not sure whether to claim from PRESEC Pacesetters as the main contractor or Jango Solutions Ltd as the sub-contractor.

As part of the dispute with PRESEC Pacesetters, PRIMARK is refusing to pay for some of the computers supplied by PRESEC Pacesetters. The current situation of equipment recently purchased from PRESEC Pacesetters are as follows:

1. Five servers purchased have been paid for. 2. 18 computers purchased have been paid for. 3. 40 computers purchased have not been paid for.

PRIMARK Direct insists on keeping hold of all the above until it is fully compensated. PRESEC Pacesetters claims that it is entitled to recover the five servers and all 58 computers.

QUESTION 1 (approx 600 words) Using appropriate case law identify whether all the essential elements of a contract are in place between PRIMARK Direct and PRESEC Pacesetters and explain the importance of such elements.

(This provides evidence for outcome 1 – assessment criteria 1.1 and for outcome 2 – assessment criteria 2.1)

QUESTION 2 (approx 400 words)

Explain and analyse the impact of standard form business contracts and advise on the importance of express terms, implied terms and exclusion clauses in line with the PRIMARK Scenario.

(This provides evidence for outcome 1 – assessment criteria 1.3 and for outcome 2 – assessment criteria 2.2)

QUESTION 3 (approx 200 words) Discuss the impact of different forms of contract and their relative legality.

(This provides evidence for outcome 1 – assessment criteria 1.2) QUESTION 4 (approx 400 words) Explain, analyse and evaluate conditions, warranty and innominate terms in contracts with reference to their meaning and effect including availability of remedies in case of breach of such terms.

(This provides evidence for outcome 1 – assessment criteria 1.3 and for outcome 2 – assessment criteria 2.2 & 2.3)

TASK 2: Liability and Negligence QUESTION 1 (approx 300 words) You have been invited by the chamber of commerce to deliver a workshop to 12 small business owners to explain how their liability differs under tort and contract.

Create an information leaflet for the delegates to take away with them that identifies the key areas of liability under tort liability under contract and the differences between the two.

(This provides evidence for outcome 3 – assessment criteria 3.1) QUESTION 2 (approx 700 words)

TROUBLE AT WORK George Fowler works for Barratt Homes Ltd and has been there for three years. Tony Smith is the site foreman and is responsible for the construction site in which George and 7 other colleagues work. For many weeks George has been subject to bullying from Roger Fyn, one of his co-workers. Tony Smith is aware that the bullying is taking place but does not take any action against Roger. One lunchtime George Fowler drank some paint thinner in an attempt to kill himself. Nigel Fisher found George Fowler and suffered a mild heart attack at the sight of George with blood coming from his mouth and nose. Tony Smith immediately rings for an ambulance. After a total of 45 minutes the ambulance arrived from a neighboring town due to the demand, the normal response time would be ten to fifteen minutes. By the time the ambulance gets there George Fowler is dead. Nigel Fisher was treated on site then rushed to hospital and made a full recovery. It was determined by the coroner that if the ambulance had of arrived after 20 minutes, as per the guided response time, George Fowler would have had a 50/50 chance of survival. Nigel Fisher is now on heart medication and suffers from depression.

As a legal advisor in the above stated Scenario, explain the nature of liability in negligence and inform the parties in this case of what legal options may be available to them. (This provides evidence for outcome 3 – assessment criteria 3.2 and for outcome 4– assessment criteria 4.1)

QUESTION 3 (approx 700 words) A ROAD TOO FAR

Ben Peters was an engineer for Top Tooling Plc with a van which was for work use only. His job was to respond to call outs from Sideline (automation) Ltd who had offices in Manchester, Leeds, Rotherham, Sheffield and Nottingham when they had problems with their machinery. On Wednesday the 2nd January 2013 he was called to the Manchester facility as they had a fault with the production machinery. He managed to fit the fault in less than an hour. While he was fixing the machine the climate control system provided by Frozone Plc failed, this meant that the company stood to lose approximately £100,000 in chemicals that had to be kept at a regulated temperature. Pardeep Singh, the production manager called the maintenance number for the climate control unit, Frozone informed him that they could not get there for 24 hours and that this was in line with their service agreement. Not wanting to lose £100,000 of stock, Pardeep asked Ben Peters if he would have a look at the unit. Ben called his boss, Jenny, who said that it was fine. Ben Peters fixed the unit. To say thank you for the extra work, Pardeep invited Ben Peters to the Liverpool FC home game that evening in their corporate box. Ben accepted. On the way driving back from the game Ben was involved in an accident where his van struck a pedestrian. Ben got out of the car and rang an ambulance immediately. No sooner had the ambulance left and his phone went again. It was Pardeep. 'What did you do to my climate control unit', he shouted. 'It has just froze all of our stock and the maintenance company won't go near it as they claim you invalidated the warranty'. 'You will pay for this', said Pardeep as he hang up.

Explain how a business can be vicariously liable and advise the pedestrian, Sideline (automation) Ltd and Frozone if they have a claim against Top Tooling Plc for Vicarious Liability.

(This provides evidence for outcome 3 – assessment criteria 3.3 and for outcome 4– assessment criteria 4.2)