Aspects of Contract and Negligence for Business

BTEC Level 5 HND Diploma in Business - Unit 5: Aspects of Contract and Negligence for Business


Unit Description

This assignment is given in the City of London College. This assignment is given from the unit 5 CLC Aspects of Contract and Negligence for Business Assignment, from the course of BTEC Level 5 HND Diploma in Business.

Learning Outcome Learning outcome Assessment criteria In this assessment you will have the opportunity to present evidence that shows you are able to Task No. Evidence (Page no)
LO1 Understand the essential elements of a valid contract in a business context 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
LO2 Be able to apply the elements of a contract in business situations 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
LO3 Understand principles of 3.1 Contrast liability in tort with contractual liability
liability in negligence in business activities
3.2 Explain the nature of liability in negligence
3.3 Explain how a business can be vicariously liable
LO4 Be able to apply principles of liability in negligence in business situation 4.1 Apply the elements of the tort of negligence and defence in different business situations
4.2 Apply the elements of vicarious liability in given business situation

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 Indicative characteristic/s Contextualisation
M1 Indentify and apply strategies to find appropriate solutions Effective judgements have been made

An effective approach to study and research has been applied
To achieve M1, you will make effective judgments about the essential elements of a valid contract and how they are applied in the context of the business scenario provided. (Task 1 & 2)
M2 Select/Design and apply appropriate methods/techniques Appropriate learning methods/techniques have been applied To achieve M2, you will have applied appropriate techniques and methods to explore the essential aspects of contract and negligence for business with particular reference to the scenario ( Task 1, 2 & 3)
M3 Present and communicate appropriate findings Communication is appropriate for familiar and unfamiliar audiences and appropriate media have been used. To achieve M3, your work will be presented in the appropriate formats and presentation (Task 1, 2, 3
& 4)
D1 Use critical reflection to evaluate own work and justify valid conclusions Conclusions have been arrived at through synthesis of ideas and have been justified To achieve D1, you will have drawn conclusions which draw out the links between aspects of contract and negligence and the scenario presented
( Task 2, 3 & 4)
D2 Take responsibility for managing and organising activities Activities have been managed To achieve D2, you will have displayed an effective approach to independent research and study will have met the assignment submission deadline and covered the unit assessment criteria. (Task 1, 2, 3, 4 )
D3 Demonstrate convergent/lateral and creative thinking Critical thinking has taken place in unfamiliar contexts. To achieve D3, learners are required to demonstrate critical thinking and problem solving skills ( Task 1, 2,
3 & 4)
Assignment Brief

Unit Number and title Unit 5: Aspects of Contract and Negligence for Business
Qualification Pearson BTEC Level 5 HND Diploma in Business
Assignment title CLC Aspects of Contract and Negligence for Business Assignment
Purpose of this assignment
The purpose of this assignment is to provide learners the opportunity to display their understanding of aspects of contract, tort and negligence in business situations. It further seeks to assess the learners on how the law of tort differs from the law of contract and examines issues of liability in negligence in business context and how they can be avoided.
Scenario:
For a number of years, Linda Green worked in a popular hairdressing salon. She became a senior stylist and held a certain degree of managerial responsibility within the salon. She had been thinking of starting up her own business, and a recent change in salon ownership made her determined to make the break from the salon.

She started up as a mobile operator, doing a small amount at home, but the bulk of her work involved travelling to clients’ houses. Her reputation soon grew and she became inundated with offers for work. If she were to make further progress she felt that she would need to set up as a proper salon in proper premises. It seemed likely that, once established, she would need to employ other staff.

She found the ideal premises for the new Scissors Salon in the form of a recently closed bookshop in the High Street. The shop needed much refurbishment, but was able to call on tradesmen who were prepared to help her at reasonable cost.

Her wholesalers were happy to give her favourable terms for a period of a year, and so obtaining the necessary supplies was not a problem. However, she was asked to agree to pilot new products as and when they were brought out.

She was, therefore, able to make the transition from a sole trader to a company owner with relative ease.
Task 1: A valid contract in a Business Context (LO1: 1.1,1.2, 1.3)

Describe the basic principles of a contract between Linda Green and a potential employee.
Identify, and explain, any legal terms that should be included in such a
Under the terms of the initial agreement with the wholesalers, Scissors Salon had to promote certain new products. A new colouring agent had been introduced and the salon was the first in the area to use it. After a number of uses, it was discovered that an allergic reaction seemed to occur with a high proportion of skin types. Needless to say, the staff were not prepared to continue use of such a product. The wholesalers insisted that the use of the product was continued until positive proof is
Considering the areas of contract law, how would you advise Linda Green to tackle the attitude of the wholesaler?
Task 2: Elements of a contract in Business situations (LO2: 2.1, 2.2, 2.3)

Linda Green purchased most of her salon equipment from her main wholesaler. Twelve hairdryers were purchased and all found to overheat and burn out after only a few weeks use. The wholesalers were unwilling to exchange the dryers, stating that they were not designed for the heavy-duty salon usage. Linda contested that they had been purchased on the original advice of the assistant manager. This was disputed. With reference to the Sale of Goods Act, outline the key legal points upon which Linda could build a case against the wholesalers. How likely, in your opinion, is she to succeed?
With reference to the Consumer Credit Act 1974, outline briefly the main issues that Linda must consider before embarking on any future credit agreements with her
Task 3: Negligence in Business Activities (LO1: 3.1, 3.2, 3.3)

Describe the differences between a sole trader, a partnership and a limited company. Identify the main legal requirements for each category of
What considerations should Linda make before selecting the name ‘Scissors Salon’ for her business?
Summarise the steps necessary for dissolution of the business should the business
Task 4: Principles of liability in negligence in Business Situations (LO4: 4.1, 4.2)

Identify the statutory provisions regarding employees of which Linda Green should be aware. State clearly from which legislation sources they have
The successful growth of Scissors Salon was rapid. Linda was determined only to employ reliable and experienced staff, but it was not always easy to find them. Consequently, she was short staffed on occasions. Whilst, in the early stages she could rely on part-time assistants willing to stay on longer during the day, this facility was only short lived. Complaints were made that she was demanding too many hours from some of her staff. Usually, the junior staff objected the
Matters came to a head when a junior stylist was asked to carry out a perm treatment. She had not been properly trained for this task and was unwilling to follow Linda’s verbal instructions from a neighbouring chair. The customer complained that she had been kept waiting and left the salon complaining vehemently. It was noted that the same assistant made a habit of leaving work as soon as the salon shut, never staying to complete the necessary clearing up. Indeed, on one occasion when Linda was not in the salon, she left more than half an hour before closing, claiming that she had finished her last client.

Linda has decided to dismiss the stylist. Discuss what grounds she has for any possible dismissal, and also list the steps she must take if she wishes to carry this out.
Unit Solution - CLC Aspects of Contract and Negligence for Business Assignment

Negligence in Business Activities

Describe the differences between a Sole trader, a partnership and a limited company. Identify the main legal requirements for each category of business.

It is very important to decide the structure of the business which depends on many factors like the expansion strategy of the business, the desired extent of the personal liability, sharing of profits and losses, keeping of accounts,etc. (Startups, 2014)

So, generally there are three types of business structures for the small sized businesses- Sole Traders, Partnerships and Limited company. Let’s focus on the differences between the three of them. (Consultancy, 2015)

Sole Trader– Sole trader is the single owner of the business and is the simplest form of business.

Profits earned by the sole trader after paying the tax.
National Insurance and Income tax has to be paid on taxable profits.
The whole control of business is in the hand of one person. i.e. sole trader.
For any debts or liabilities of the business, the sole trader will be personally liable.
When the sole trader of business dies, the business dies or it is passed on to the next generations.
Partnership- When two or more sole traders come together to run a business, it is called Partnership.

Profit after tax is shared by the partners of business.
National Insurance and Income tax has to be paid on the shared profits by the individual partners.
Here, the control of business is in hands of the partners according to their share in the business.
The partners are liable for paying off any debts or liabilities of the business.
In case of partnership, when one partner dies, his share is transferred to the partners.
Limited company- It is an organization to run the business but the company is the separate legal entity and distinct from its owners.

The profit is shared among the shareholders.
Corporation tax is paid on taxable profits.
The control of business in Limited Liability Company is in the hands of the Board of directors who are appointed by the shareholders of the company.
The main liability of the limited company is that the liability is limited to the share capital holding of a shareholder in the company.
Nothing happens to the company when the shareholder dies. It is a separate legal entity which goes on.
Main legal requirements for Business

Sole trader
Sole traders have to register with HM Revenue & Customs (HMRC).
A sole trader has to pay Income Tax on his profits.
A sole trader has to register for VAT, if the turnover reaches VAT Threshold.
The name chosen for the sole trader business should not be exactly same as the existing business.
Partnership Business
The partnership business has to be registered with HM Revenue & Customs (HMRC).
The name chosen for Partnership business should not be similar to another registered name.
The individual partners have to pay Income Tax and National Insurance after self-assessment.
The partnership firm must register with VAT if the Taxable turnover for VAT is more than £82000.
Limited Company
The records of the company have to be kept with Companies House and HM Revenue and Customs (HMRC).
Company tax return has to be filed by the directors and corporation tax is paid.
The profit of the company is distributed among the shareholders.
The company should report to HMRC if there are any changes in the contact details of the company.

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