Types of Contracts Between Employers and Employees

The issue at hand is the induction of new employees who are not legally qualified to work in various capacities. For this case, the Citizens Advice Bureau needs to put into consideration the various elements of a legal contract. For a contract between the employer and the employee to be recognized by the law, it has to have the offer, acceptance, consideration, mutuality of obligation, competency and capacity, be in writing, and follow the guidelines for the formation of a contract under the Uniform Commercial Code (UCC) (Collins 2008, p. 43). These elements ought to be present in all contracts between employers and employees for the latter’s legal qualification.

There are four main types of contracts, namely, leases, employment contracts, sales contracts, and licensing agreements:

  • Leases specify the terms of the relationship between landlords and their tenants. For many businesses and employers, rent makes an important part of the costs that the business shall incur periodically. The Citizens Advice Bureau has the responsibility of ensuring that all employers adhere to the terms of the lease contract. However, not all businesses rent out facilities for offices, retail store space, warehouses or manufacturing facilities. In such a case, lease laws do not apply (Beatson & Burrows 2010, p. 22). Like all other contracts, leases should have the elements of a contract as mentioned above.
  • The second and most relevant type of contract is employment contracts. This type of contract is between an employer and an employee and states the terms of their relationship as far as aspects, such as the terms of pay, are concerned. Employment contracts are of various types and include permanent contracts, periodical contracts, and work-for-hire contracts that are common with independent contractors. In all employment contracts, the Citizens Advice Bureau has to ensure that both parties agree to the terms of the other party in signing. While there may exist oral contracts, written contracts give the employees certainty and security of their jobs. Even with all these aspects, each employer should ensure that their potential employees meet the legal requirements of the country to obtain a job.
  • The third major types of contracts are the sales contracts. Sales contracts exist between a buyer and a seller and document the transfer of ownership of property from the seller to the buyer. Many businesses operate without sales contracts, especially the small companies. However, the Citizens Advice Bureau needs to ensure that all employers have sales contracts for keeping records and establishing the activities a business engages in (Koffman & Macdonald 2010, p. 19). Sales contracts relate to employment contracts closely given that the level of sales determines the terms of employment, especially the working hours and the pay.
  • The last major type of legal contracts is licensing agreement. Licensing agreements are between the owner of intellectual property and a second party who needs to use the intellectual property for a given reason and period. The terms of the licensing agreement include the period of use of the intellectual property which refers to various creations of the mind, involving designs, trademarks, logos, and inventions. For the Citizens Advice Bureau, intellectual property is an important part of the relationship between an employer and employee (O’Sullivan & Hilliard 2014, p. 92). Employment laws require that employees keep a company’s confidential matters a secret to avoid the breach of confidentiality. Many employment contracts have such a clause that requires signing by the employee.

The legal definition of a contractual term is ‘any provision forming part of a contract’. Each of the terms gives rise to a contractual obligation whose breach could give rise to litigation. The gravity of the terms depends on their centrality to the contract. The terms can be classified either as conditions or warranties or innominate terms. Terms that go to the root of a contract are called conditions (Furmston 2012, p. 221). Breach of a condition leads to the repudiation of the contract. A warranty is less severe compared to a condition and, thus, survives a breach. Breach of warranties or conditions gives rise to damages. Innominate terms, on the other hand, only repudiate the contract when the legal benefits of the contract have been removed from the party that is innocent. This term originated from Lord Diplock in the Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd case. In the contracts between employers and employees, these terms ought to be adhered to in order to establish the legality of their employment.

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The enforceability of contracts depends on various statements. These statements create the contractual obligations that make the foundation of the contract. For instance, puff statements cannot be enforceable in a contract. A puff is a statement which, when heard by a reasonable person, would not be taken seriously. Another statement that does not make part of an enforceable contract is a representation. Representations are statements that do not amount to terms of the contract and whose truth cannot be established. Representation does not, therefore, give rise to a contractual obligation but could amount to a tort as is the case with misrepresentation. Another statement that is part of a contract is a term. Terms are similar to representations, but the source of a term guarantees the truth, unlike a representation. To determine the nature of a statement, the factors that are considered are the timing, the contents of the statement, knowledge and expertise, and the reduction in writing. The terms of a contract may be expressed or merely implied. Terms that are implied are not stated, but form a part of the contract anyway. The terms may be enforced in fact, or in law under either common law or statutory law. The terms of a contract can also be implied by trade or custom.

Task 2

The issue at hand is whether Mary should make “Sales are Us” to replace the faulty television and whether she is entitled to be compensated for the injuries to her arms and the loss of income incurred due to the inability to work for three weeks.

The rules that apply to this case are the laws of contract. In essence, it should be established whether Mary’s signing of the contract with “Sales are Us” without reading created a legal and enforceable contract between them. The seven major elements of a contract should be applied to this case to determine Mary’s intentions. Also, the contractual terms ought to be taken into consideration in order to determine whether Mary deserves a new television set, and if she should be compensated for her injuries and loss of income for the three weeks when she could not go to work.

The first element of a contract is the offer. In this case, “Sales are Us” is said to have made the offer to Mary by requesting her to sign the contract before selling her the television set. The contract was in the form of a written standard form contract. The second element of a contract is the acceptance. For a written contract, like the one in this case, acceptance ought to be written (often the accepting party’s signature or name in their own handwriting). Mary accepted the offer when she signed the contract even without reading. The fact that she signed the document completes the offer-acceptance cycle. The third element of a contract is the consideration. The contract between Mary and “Sales are Us” had consideration in the form of the television set since it is the item of value in question. Mary was only allowed to take possession of the television set after agreeing to the terms of the contract as required by “Sales are Us.”

The other element of a contract is the mutuality of obligation. Mary’s contract to “Sales are Us” had mutuality of obligation given that Mary was to pay to the company, while the latter was to give a television set to Mary. The mutuality of obligation means that indeed, there was a contract between “Sales are Us” and Mary. To be enforceable, contracts have to be in writing. Although there are oral contracts that are enforceable, the law often favours written contracts given that the specific terms can be traced, and the case determined. In Mary’s case, the contract was written as evidenced by the fact that Mary signed the agreement in writing.

Besides these important elements of a contract, the parties in the agreement should have the capacity and competency to enter into a legally enforceable contract. Capacity refers to the party being of mature age. Although it is not explicitly stated so, Mary is an adult given the fact that she is employed. Competency refers to the party to the contract being of sound mind. Mary has no record of being of unsound mind and, therefore, entered the contract in her right mind. This aspect makes the contract enforceable. Lastly, enforceable contracts are required to follow the UCC guidelines of formation of a contract (Hare 1887, p. 27). Section 2-204 emphasises that “a contract for the sale of goods may be made in any manner sufficient to show agreement, including offer and acceptance, conduct by both parties which recognizes the existence of a contract” and other means (Hare 1887). In 2003, the U.C also approved the enforcement of contracts formed through electronic agents, such as computers, in keeping up-to-date. The manner in which Mary entered into contact with “Sales are Us” is in line with the UCC requirements for a contract. All the elements of a contract have been satisfied meaning that the contract between Mary and “Sales are Us” is enforceable in a court of law.

The law of terms in this case will thus determine whether Mary should go to court with her claims. According to the Sale of Goods Act of 1979, the title, quality, sample, and description of a good are the conditions of the contract. While the descriptions of the television are not explicitly stated in this case, it can be assumed that the television was a new set when Mary bought it from “Sales are Us.” A statement that was made by the sales representative of “Sales areUs” that Mary was to sign ‘a standard form contract’ could have, however, misled Mary. She could have assumed that a standard form was one with the normal ‘goods once sold are not returnable’ clause. Aside that aspect, the reasonableness, and equitableness of the terms in the contract are in heavy doubt. “Sales are Us” stated that it does not accept liability for the repair of faulty products and that the customer should bear all costs related to the repair of faulty products (Simpson 1996, p. 87). Besides that clause, “Sales are Us” claims that it is not liable for the death or injury of the customer caused by its faulty products. These terms are not reasonable given that “Sales are Us” employees could make use of the clauses to intentionally make the products faulty since no one would hold them responsible for the consequences of faulty products.

Mary has two options on her hands. First of all, she could sue “Sales are Us” for having misled her into signing the contract by stating that it was a standard form when it was far from being standard. If she takes this cause of action, she should state that she assumed the contract had the normal clauses that accompany many home electronics, such as warnings as to the risk of electric shock among others. She can also state that the terms of the contract were unacceptable given that “Sales are Us” put unconventional terms in its contract. Indeed, the company should take responsibility for its products according to the law on the sale of goods given that electronics have many risks. “Sales are Us” also has to ensure that it sells its customers safe products as required by the law.

The second option that Mary has been not to seek any legal war with “Sales are Us”. In this option, the law is against her for not having read the terms of the contract before signing them. Although the “Sales are Us” sales representative told her that is a standard form contract, it can be assumed by the courts that it was not standard in terms of all electronics from all sellers but standard with “Sales are Us” and its customers. The fact that Mary signed the contract means that she agreed to the terms of the contract (Klass 2010, p. 49). The terms of the contract, however, state clearly that “Sales are Us” is not liable for any losses suffered by the client. Therefore, Mary should not seek legal action against “Sales are Us”.

Task 3

The issue at hand is whether Paul should seek legal action against Film Flops for the injury he suffered when an intoxicated employee of the company poured hot coffee on him and caused him serious injury.

This case follows the rules of the laws on liability to establish whether Film Flops should compensate Paul for the injuries he suffered. There are two main types of liability, namely, liability in tort and contractual liability (Stone & Devenney 2015, p. 98). According to tortious liability, Film Flops is liable to pay Paul damages as the firm committed a tort for negligence. The fact that the firm allowed its employee to work when intoxicated knowing well that the employee in question would handle dangerous issues, such as hot coffee, is negligence on its part. For contractual liability, the fact that Paul entered into a contract with Film Flops forms part of the contractual liability that the company had in ensuring the safety of its clients. The difference between contractual liability and tortious liability is that liability in torts is provided in the law, while liability in a contract is provided by the terms of the contract.

The nature of liability in negligence is that it banks on the nature of the tort. In this case, Film Flops is liable given that its employee was intoxicated and, therefore, careless. Vicarious liability stems from the fact that a party may be found guilty even if it did not commit the offense itself. In this case, Film Flops is vicariously liable though its employee committed the tort. The employee is the responsibility and agent of Film Flops; thus, the firm will be sued for the negligence of not ensuring the sobriety of its employees (Chandler & Brown 2007, p. 40).

The conclusion of this case is that Paul should go ahead with the suit against Film Flops given that there is strength in his allegations. While the company may state that it was an accident, the fact that it has been established that the employee was intoxicated is enough evidence of tortious liability against Film Flops.

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