Aspects of contract and negligence for business
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Student Name
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Lwam Belay
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Student ID
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P1030125
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Assessor Name
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ABU TIMBO
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Qualification
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PEARSON BTEC LEVEL 5 HND DIPLOMA BUSINESS MANAGEMENT
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Unit Number & Unit Title
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Unit 5: Aspects of Contract and Negligence for Business
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Assignment Title
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MANAGING FINANCIAL RESOURCES FOR A BUSINESS
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Date of Submission
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14/12/2016
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Contents
Introduction:
Contract in business activities is very important matter. Generally, contract is considered as the agreement between two or more groups or parties to perform various kinds of service, provide product as well as commit to act and it is applicable by law in case of any unexpected incidents. If either of the parties does not have the capacity to contract, the contract is not valid.PRIVITY of contract is the relationship that existsbetween the parties to an agreement. In everyday business life, people are to maintain contracts during developing contracts, so the concerned matters and the pros and cons should be kept in mind. On the other hand negligence in business refers to the matters that the things or tasks which should not be done by the existing prudent or ordinary employee of the organization. This assignment will actually deal with legal elements of contract, impacts of contracts, evaluation of the impact and unfair contract in a given situation, liability, elements of the tort of negligence.
Task 01
1.1 Identifying the essential legal elements for the information of a valid contract and explanation of their importance:
Agreement is known as the consideration under which some groups or entities make some kinds of deals by which they are supposed to show some definite organizational behavior. Without business contracts a business cannot be run properly. Without legal elements for the information a valid contract is really impossible.
There are some obvious legal elements for the information of a valid contract. The things are discussed below.
a) Offer
b) Acceptance
c) Consideration
e) A written instrument[CE1]
f) Legal capacity
g) Privity of contract
These elements and their importance require to be explained. The things have been given.
a) Offer:
Offer is regarded as some things that; any specific party shows their own interest to buy or sell any kinds of asset from another party. There are some differences between invitation and offer such that, an invitation to treat is a way and time when the clients invite the contractors to make known their offering things. This is about giving invitation anyone through print or electronic media for job. In addition to, offer is giving offer to someone without any formality like invitation. In case of offer there are two things such as OFFEROR and OFFEREE. OFFEROR is the one party who[CE2] makes the offer and on the other hand OFFEREE is another party who accept the offer.
Importance:
Offer is the prime condition for any kind of valid contract. This is the first approach for any contract. The offer should be relevant and meaningful to the OFFEREE. Without giving necessary and beneficial or legal offer the contract cannot be valid (Business law, 2006).
b) Acceptance:
Acceptance actually can be termed as the unconditional assent, communicated by the OFFEREE to the OFFEROR to all kinds of matter of the offer. In addition to, it is created with a view to accepting[CE3] the offer. Acceptance is so vital thing because without acceptance any agreement cannot be succeeded.
Importance:
The offer should be accepted by anyone. Acceptance of an offer narrates its reliability. If anyone does not accept smoothly any kind of contract then that will not formatted as the valid contract. Acceptance shows the value of the contract (Stpmoodle. 2016).
c) Consideration:
It is about the benefits that actually each party wants or expects to get from the deal. Consideration is[CE4] assumed as the foundation of ever contract. A promise except consideration is valueless.
Importance:
If the OFFEROR cannot consider the limitations and demands of the OFFEREE then the OFFEREE will not be agreed to take the contract then it will not be succeeded.
d) Mutuality of obligation:
This is about the principles that give that unless both of the groups to a contract are bound to do, neither the groups are bound.
Without this the whole contract may not be successful because when employers are not obliged to pay and the employees are not obliged to work then the whole deal can be hampered.
e) A written instrument:
This is some kind of formal document which is used in business agreement highly. Without a written instrument any kind of deal cannot be brought under judgment (Hubbard, Thomas and Varnham, 2006).
Importance:
For ensuring the peaceful and qualified contract, written instrument is very much important. Without accomplishing [CE5] this element, there can be violence.
f) Legal Capacity
The term legal capacity is related to the legal ability of an individual to enter into a contractual relationship and maintain legal status (Forest, 2008). The absence of legal capacity makes a contract a ‘voidable’ one. A minor lacks legal capacity to form a contractual relationship (De Francesco v Barnum 1889). Again, mental capacity also considers as an element of legal capacity (Hart v O’Connor 1985).
g) Privity of Contract
The term privity of contract means that the contractual parties can take legal actions to each other and third parties out of the contractual parties cannot be held liable for the activities and breach of contract by the contractual parties (Elliot and Quinn, 2009). The case summary of Dunlop Tyre v Selfridge (1915) can be stated to explain the aspects related to the doctrine of privity.
1.2 Discussion of the impacts of the following types of contracts:
Bilateral and unilateral contract:
Bilateral contract is the most popular and used kind of contract in the current business world. In this type of contract there are mainly two kinds of groups who perform under this contract. The parties are to act to accomplish definite obligations to fulfill the agreement. It can be exemplified in such a way that, a person offers a piece of land to the clients to sell and a customer have become agreed to buy the land in a specific price. Then the owner should transfer the ownership to the buyer and the buyer should pay the wanted amount. Thus the two parties play their own role together[CE6] .
On the other hand, in unilateral contract only the one party is responsible. This is one kind of contract in which one group makes promise without doing any kind of mutual deal with the other party. In this regard the OFFERORs have to do everything if the OFFEREE promise then the OFFEROR has to fulfill the promise but there is anything to do if the OFFEREE refuge to fulfill[CE7] the promise because he/ she is obliged to promise of the OFFEROR(McInnes, 2007).
Void and Voidable contracts:
Generally, the void contracts are regarded as the inapplicable contract. In this case if the contracts are done on the basis of the illegal elements or the deal is done against of the running law and regulations then that is termed as the void contracts.
In addition to, voidable contract is a kind of contract that actually can be revoked or rejected by the[CE8] party of the both parties. In these regards, the fraud, unclear, mistake deal can be voidable.
Distance selling contracts:
This is about the contracts which are not actually face-to-ace. Here there are no appearance of the sellers and buyers. This is done by online such as internet, website etc. (Routledge-Cavendish, 2006).
1.3 Analyze term in contracts with reference to their meaning and effect:
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Meaning
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Effects
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Express Terms
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Express terms are known as the term of relation with the parties where they mentioned and agreed the contracts by written or verbal.
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The effect of express term can argue that all the companies are confirm the terms.
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Implied Terms
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Implied terms are not mentioned and agreed the contracts of the parties and not understanding the commercial sense.
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These types of terms evolve with no written contract and its deal with the court.
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Condition
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Condition is deal with the implement of the parties by their conditions[CE9] , rights; law and duties with include the contract.
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The contract will be finished by the violation of the conditions and the current situation of the party.
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It is insure that the commitment to be right by the one party and another party except it.
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By any causes the injured party can make the condition of warranty and break it.
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Innominate Terms
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This term is not required the warranty and condition. Environmentally, it is more humble in creation.
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Exclusion Clause
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In this term, both parties are responsible to forget by the condition or fact that happens in current situation.
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Task 2
2.1 Applying the elements of contract in given business scenarios:
Offer and Acceptance
An offer can be explained as a proposal given by one party to another to be involved in a contractual legal relationship. In an offer, there are two parties such as the offeror, who makes the offer to another party and the offeree, to whom the offer is made (Cheeseman, 2012). If the offeree accepts the offer, a contract is formed between two parties. On the other hand, invitation to treat is a mare statement to invite a certain group of people to make an offer for certain thing. For example, price catalogue, advertisement, time table of train etc.
A counter offer is a situation where the offeree makes a new offer to the offeror instead of accepting the original offer made by the offeror and when a counter offer is given by the offeree, it means that he doesn’t accept the original offer and the original offer is leaps.
In this this case, the advertisement given by East Midlands Airways is an invitation to treat, the proposal of Phil to buy the Airbus is an offer to Joseph is an offer and the consent given by Joseph is acceptance of that offer which turned the offer to a contract.
Consideration
Consideration is one of the essential elements of contract which can be explained as the value of a contract such as some right, interest, profit, benefit, money etc. In English law, there are two types of consideration named, present or Executed consideration future or Executory consideration (Bagley and Dauchy, 2012). Executed consideration means the consideration which moves with the contract simultaneously and Executory consideration means the consideration which is to be done or executed in a future time. A consideration must not be illegal and illusory at the same time, a consideration may not be sufficient, it should be adequate.
In this given case, consideration is the subject value of the contract between Phil and Joseph.
Intention to Create Legal Relations
To make a valid contract it is essential to both party have an intention to create legal relation between them which means the contract must be enforceable by court (Allen and Kraakman, 2016). It can be categorised in three parts such as, domestic agreement, in where the parties are not bound to create legal relation, social agreement in where the parties are not bound to create legal relationship if it is not mentioned and commercial agreement which is an agreement to create legal relationship between the parties.
In the given case Phil and Joseph both have the intention to create legal relationship between them.
Legal Capacity
The term legal capacity means the parties must be legally capable to enter in a valid contract (Beatty and Samuelson, 2015). A person who has lack of legal contractual capability can’t be bound in a contract, for example, a minor, insane, unsound mind is not able to be a party of a contract.
In the given case, both party Phil and Joseph are seems legally capable for contract.
Third Party Involvement
There is no third party involves in the given case scenario and Phil and Joseph are representing their respective organisations in the given case scenario. The oral contract has been formed between Phil and Joseph which has legal validity as they are representing their respective organisations.
2.2 Advising Cathy whether the exclusion clauses was incorporated into her with Brakes Ltd:
First Case Situation
The ‘Condition’ of the contract was to export phones that could be immediately used within the UK. This condition was stated in the contract and for this reason, it can be considered as an ‘Expressed Term’ of the contract. The violation of the condition extends legal power to the contractual party to terminate the contractual relationship (Poussard v Sppiers & Pond 1876). So it can be said that the importer has the right to terminate the contract due to the breach of the condition.
Second Case Situation
‘Warranty’ is a subsidiary term where the violation of warranty will result in compensation to the innocent party though the innocent party has no legal right to terminate the contract (Bettini v Gye, 1876). As, there is a violation of the contract by not exporting the phones in a suitable condition and the phones are required to tuning, the importer can bring legal action against the exporter due to the breach of warranty of the contract.
Cathy v Brakes Ltd
If the contract excludes a party from liability arising from certain events during the contractual relationship, then such kind of clause can be referred as an ‘Exclusion Clause’ (Curtis v Chemical Cleaning Co 1951). By following either of the three approaches such as signature, notice and previous dealing or custom, an exclusion clause can be incorporated in a contract (Beatty and Samuelson, 2015).
If Cathy was made aware of the exclusion clause incorporated to the contract by giving notice, the due to the liability arising from the stated events, Brakes would not be liable (Chappleton v Barry UDC 1940). If Cathy signs on the contract containing the exclusion clause, then Brakes will also be free from any kind of liability covered by the exclusion clause (L’Estrange v Graucob, 1934). The incorporate of the exclusion clause can also be established as a custom or previous dealing (J. Spurling Ltd v Bradshaw 1996).
Common Rules of exclusion clause relates to the legality issue of incorporating an exclusion clause in a contract (Bagley and Dauchy, 2012). Brakes is required to satisfy two issues to establish the legality of the exclusion clause. At first, the exclusion clause should be incorporated to the contract through signing, giving notice or considering as a custom. Finally, the loss covered by the exclusion clause should be stated (Holliers v Rambler Motors 1972[CE13] ).
Statutory Rules explain the legal relationship between the parties under the business and commercial contracts. The application of UCTA (Unfair Contract Terms Act) – 1977 establishes protection from the liability arises from tortuous liability and contract liabilities (Allen and Kraakman, 2016). On the other hand, UTCCR (Unfair Terms in Consumer Contracts Regulations[CE14] ) – 1999 establishes fairness in the contract between seller and consumer (Director General of Fair Trading v First National Bank, 2001).
2.3 Evaluate the effect of the exclusion clause and unfair contract terms on Cathy's contract:
The exclusion clause says that one party to the contract will not to be liable for the particular happenings. For example, a man goes to the gym and contract for the exercise here. But the owners will not liable if the man is injured while exercising. On the other hand, the unfair contract terms act limits companies are able to remove liability in the contracts. There are several exclusion clauses which privileged Cathy’s particular rights in the contract between Cathy and the brakes limited. Cathy could be mentioned the particular tasks by the brakes limited with non-performance tasks (Lawson, 2011).
By the described case, Cathy was injured in several times in road accident by car. But this cause was happened the unwilling carelessness of the employees of the breaks limited. By the term of exclusion clause the breaks company are not responsible for this accident. For this reason, the breaks limited no pay for the Cathy. Under the Unfair contracts Terms 2007, it applies only to businesses and does not to consumer contract (Lawson, 2011). By the Unfair Terms Act 2007 and the Unfair Terms in Consumer Contracts Regulations, the business cannot pass up the responsibilities of individual death or injury that happened in the Breaks limited. In effect on the Cathy’s contract has been useless by the condition of unfair contracts terms.
The exclusion clause and the unfair contract can be so harmful to the customers who are not conscious enough about the contract which has been already shown in the above discussion. This can be seen as the advantage for the owners but the customers can be suffered in large extent.
Task 3
According to Burton (2009) Tort is a law which covers most civil lawsuits. The meaning of Tort is a wrongful act or an infringement of a right leading to legal liability. The man who commits to hypocritical act that harm resulting in legal liability is called a tortfeasor. It is a combination of civil law which solves honoring a person to recover harm for loss and injury. The fundamental works of Tort are rights, compensation for infringement and the related duty to respect the rights. There are some different in contrast liability in trot with contractual liability. Here are some below:
Contrast liabilities in trots are concentrated on a actionable wrong. It is the civil action based of the harm or injury inflicted by one organization upon anther. In this trot it can be easily find the action[CE15] like as battery, assault, intentional infliction of emotional distress and product liability. This liability covers violations where the two organizations internationally injured by other person such as in negligence claims or strict liability claims. It also ensures the paying for the violence from the victim monetary damages to their losses (Burton, 2009).
Nature of obligation: The contractual liability imposed more freedom than the tortuous liability.
Duty: In liability of tort duties are imposed by act and applicable for all people in society on the contrary in contractual liability duties are forced by contractual conformity between parties.
Privacy: Privacy is severe in contractual liability because the parties can sue for damages but in liability of tort privacy is not so firmly maintained.
Damages: The nature of damage is liquidated in contractual liability whereas in tortuous liability damage is un-liquidated
On the other hand, contractual liability focused with the formation, drafting and consequences of a legally binding agreement between two organizations. A contract is an agreement between two parties by their responsibilities and duties. For this reason, contract liability introduced different transactions for the sale of goods and services.
There are some similarity between contract and trot such as both are civil wrongs and the person wronged sues in the court for compensation (Graw, 2008).
3.2 Explain the nature of liability in negligence:
The liability of negligence is very bad effect on the individual performance. The liability of negligence happened by the two contract party with an agreement. By the negligence, the damages from an essential topic of the law of trot as the recoverable amount rely on from man to man and place to place and cannot archive at the time the damages had finished. If one of the parties in the contract lost to carry, the negligence takes place with due care
In this below, describe the nature of liability in negligence:
Following to duty of care a man is going to be make amends for the harm which actually happened to his or her. It can be proved that must be logical but one needs to evidence successfully the amount of losses. It is the duty of care which owed to him by the defendant. When the one party loses the due care in get rid of duties in the contract, then the defendant claims for compensation for the harm of another party (Burton, 2009).
A breach of duty happens when one person has a duty of care forward another or organization but it losses to live up to standard. It followed by the defendant as the present situation of due care or logical amount of care ways breached. It is proved that the individual defendant owed duty to the claim.
It is breach of damage or loss connected with physical of financial damage has been suffered by the defendant. In this position, the claim is prove that the duty of breach consequences the harm or loss for defendant
In this process, the business organization takes their agreement by liability in negligence.
Employees logically can expect supervisors to embody the organizations philosophy and values. Vicarious liability is a team used in many employment lawsuits. It depends on the action of supervisors and managers behavior. On the other hand, a vicarious liability is a place in which one party is held party duets for the illegal actions of the other party. The employees are neglectful by their size, and height in the company. It can be regally responsible for discrimination and harassment which happened in the work place. On this way, the relation with persons employment otherwise it can be viewed that all logical process have been taken to prevent this liability. The employees a business firm recruited and that firm will be vicariously liable for the action of the whole employees (Smith, 2004).
Now the main topic of any case of vicarious liability is whether the employees were acting in a personal capacity or the course of their employment. The first significant test which the courts improved was the control test. By this test, a person is said to be a servant if his employers retains a right of control. The integration test is first identified by Lord Denning in Cassidy v Ministry of Health. The multiple test is refers to the economic reality test. In involves the analysis through a checklist of factors regarding the employment status. There are two necessary elements for vicarious liability in Tort such as employment relationship and the course of employment. The employment relationship include with employer and employee. The employment committed by the employee’s tort. Employment relationship makes a good connection between employers to other employees. (Burton, 2009).
By the all business organization there are many conditions where in business proprietor may hold vicariously liable ranging from discrimination, harassment, copyright infringement and libel. The employees maintain their fundamental work in the company. Then they follow the vicarious liability. The employees acting out of whims and then the employer would not be held veracious liable for this harassment (Smith, 2004).
Task 04
4.1 Application of the elements of the tort of negligence and defenses in different business situations:
Generally the tortuous liability happens by the act of breaching of a duty which is actually primarily fixed by law. This type of duty is targeted to provide to the persons during providing service but in some willing and unwilling cases the duty can be breached and ultimately the tortuous liability is happened. There are some specific criteria or elements of tort of negligence. Among them most important three elements are:
a) Duty: The result of some negligence cases rely on whether the defendant actually owed a duty to the complainant. There are some kinds of duties towards to the plaintiff by the defendant. Because there are some close relations between plaintiff and defendant which is actually[CE18] determined by laws and there are some duties existed during serving anyone by defendants.
b) Breach of Duty: This is about not fulfilling the imposed duties on the defendant. As there are some duties to the plaintiff, so the defendants should carry out the duties. When defendants cannot take proper care of the customers, then that is regarded as the[CE19] breach of duty.
c) Damages: For the cause of breaching duty some kinds of damages can be harmed to the plaintiff. But it is also true that all kinds of breach of duty cannot bring in damage to the customer. In this case, the concerned plaintiff should prove his/ her injured[CE20] caused by the breach of the duty by the defendants (Cornford, 2008).
On the basis of the elements of the tortuous liability for negligence, it can be said that the plaintiff Janet is affected by the acts of the staffs of King’s restaurant. There were some specific duties to Janet by the staffs of King’s hotel what Janet actually deserved. But at the above case study it is seen that, the staffs could not fulfill the duty but their service caused acute danger to Janet which is sign of breach of duty that ultimately resulted in damage.
In order to judge or consider the incidents of the above case study the incidents of Blyth V. Birmingham waterworks Co. can be illustrated. This was in 1856. In that incident Plaintiff was affected by a defendant through a water plug which was installed beside the plaintiff’s house. Suddenly the water plug was leaked and the person was affected very badly. At last the in the jury board the verdict went to the interest of the plaintiff. So, considering that matter, like the house owner Janet is affected. For this reason verdict will be gone to the interest of Janet and Carlos.
The incident Janet of Carlos can also be considered through the Consumer Protection Act 2007. At the act, the right to claim compensation in case of damage was given. On the basis of the section 2(1) of the act, damage as established when there has been any damage. When damage will be happened then the affected person can claim directly towards the problem. Like that Janet and Carlos can ask judgment of their problems.
In addition to, complaining the relevant authority showing the problems associated with Janet and Carlos can ask for verdict which actually is positive for them. On the basis of Donoghue v Stevenson (1932) incident the matter can be considered. According to the used method of Donoghue v Stevenson (1932), Janet and Carlos can get their problem solved(Klar and Rainaldi, 2005).
4.2 Application of the elements of vicarious liability in given business situations:
Among the elements of the vicarious liability, the first one is proving the rights of getting care from the organization to the client. There is another thing such as second defense that is very possible to make prove that, between the victim and the service provides quite standard of care should be applied. In this case it is very important matter to note that, standard type of care is considered as the normal care that is followed by the care provider to the victims or customers. On the[CE21] other hand the third defense that is dealt with the available relationship between the service provider and the claimant(Atiyah, 2007). This kind of relationship can be easily established for the cause remaining the required amounts of skills and competencies within the employees for which the service provider has been hired by the victim people.
Christian Auctioneers:
At the matter of occurred incident to Angelina, the Christian Auctioneers can prove their company’s strength. They can reduce their faults by showing some kinds of specific logic. The company can say that there is no any kind of strong relationship between Angelina and Brad who was appointed to make the valuation of the furniture owned by Angelina. Brad was sent to make only valuation of the furniture but not the painting. As Brad had no any experience about the price of the painting so the company can negotiate in this matter. In this case it was not right to ask the valuation of the painting by Angelina as Brad did know little about the painting. In this way, the company can prove themselves as pure by saying that there was not any relationship in that kind of transaction.
Brad: At the matter of Brad, he can show some specific cause behind his activities. He can proclaim that, he did his best during making valuation of the furniture. At the matter of setting price of the furniture there is no any complaining against him whether he did not any kind of wrong. As he not hired for the task of painting valuation so can show proper logic which is suited to him and enable to prove his prudence (Atiyah, 2007).
Defenses Available to Christina Auctioneers: Exclusion clause should be proved by the defendant Christina Auctioneers as a major defense tool. It should be proved that for the unofficial activities of Brad, Cristina Auctioneers would not be liable. The breach of agent-principal contractual relationship should also be proved as a defense tool (DiMatteo, 2016). Brad was instructed to follow the official instructions only, and by violating the instructions, Brad had breached the contractual relationship with the employer, Christina Auctioneers.
Conclusion:
Regarding the aspects of the negligence in business aspect there are so many rules and regulations in UK. For the cause of any kind of beach of the existing rules and regulations can bring various degree or amount of punishment to the concerned people. It is very important to note that, any kind of business organization should maintain or follow a minimum amount of condition about its application of rules and regulations. They should create a congenial environment which [CE22] assists to maintain with the service taker. But if any kind of problems is occurred regarding service providing and taking that can be solved easily through the rules.
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