Before Katie enters into a contract with her builders its important that she is aware of the different types of business agreements available to her that will safeguard her interests. The agreements can be unilateral, bilateral and standard from c

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CASE 1

  1. Before Katie enters into a contract with her builders it’s important that she is aware of the different types of business agreements available to her that will safeguard her interests. The agreements can be unilateral, bilateral and standard from contract.

I will now explain to Katie in detail the use of each of these agreements mentioned above and I will advise Katie which agreement is most suitable for her.

Standard Form Contract; is a document prepared by many large organisations such as mobile phone operators, gas and electricity suppliers etc...This type of contract allows the large organisations to set out the terms on which they contract with the customers. The customer usually must either take it or leave it if they don’t’ agree to the terms. It leaves the customer no bargaining power at all.

A unilateral contract is where all the terms come from one party. In general adverts for return of lost property for reward are thought of as being “unilateral contracts”.

A bilateral agreement is where the terms of the contract come from both parties involved. Bilateral agreement can be drawn between two individuals, between one individual and a company or between two companies. A bilateral agreement is the most suitable contract for Katie and her builders. This type of agreement gives Katie the freedom to set her own terms as well as indulge the builders to set their own terms in order to get the work done effectively. If either party of the agreement fails to live up to the terms it could mean legal action on the part of the aggrieved party.

  1. A standard form contract is designed to exclude or limit liability in the event of a breach of contract. An exemption clause can only be effective if it’s a term of the contract. If a person signs a contractual document is bound by its terms even if they don’t read it. If the document containing the clause is not signed by the injured party, they may be able to avoid its effect by proving they had insufficient notice of it. (Chapelton v Bury UDD 1940). One of the advantages of a standard form contract is that there is no need to drafting and no need to worry about uncertain terms in the contract. Standard form also spread risk equally to the organisation and the customer.

A disadvantage could be that the terms are not very easy to understand, interpretation between parties can be different that can arise disputes.   

  1. A clause in a standard form contract could read “Asdren Plc is not liable for any property damage however caused”. What this means that Asdren Plc would not take responsibility for any damage caused to the property however it’s caused.  
  2. The rules of contract remain the same where distance selling is concerned, however internet companies have to adapt and follow regulations, which were passed to protect consumers when they shop online or enter into other contracts at a distance with a supplier. Properly called the , the Regulations do not apply to contracts between businesses. They have been in force across the UK since 31st October 2000 and they implement a 1997 EU .

The Regulations give consumers a right to:

  • receive clear information about the supplier, the goods or services and the sale before deciding to buy;
  • confirmation of this information in writing;
  • a cancellation period of 7 working days in which to withdraw from the contract; and
  • Protection from payment card fraud.

In advising Katie the need of a contract and how contract is formed, there is a need to explain the three key elements which for the contract. Without the key elements the contract is not legally bound.

Offer; is a definite promise to be bound on specific terms. It has to be a firm, clear and full statement of terms indicating intention to be bound on acceptance by the other party to whom the offer has originally has been originally communicated. A definite offer may be made to a class of persons or the world at large (Carhil v Carbolic smoke Ball Co 1893). An offer may be expressed to last for a specified time. If the offer didn’t express time limit, the offer will expire after a reasonable time.

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It’s important to acknowledge that an offer is not always an offer. An offer is not an offer when there is invitation to treat. There are various types of invitation to treat such as auctions, sales advertising for tenders (Fisher v Bell 1960).  Kate needs to be careful when she places an advert looking for builders; it must be carefully drafted in a certain manner where it doesn’t have all the terms and conditions. This way she won’t be obliged to enter a contract with everyone who contacts her as the advert is only an invitation to treat.

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