Concept of Contract Law Essay

Excerpt from Essay :

Contract Law

A contract is a legally enforceable agreement that occurs between two parties in exchange of goods and services or in exchange of money. However, a contract is much more complex under the law because there are number of factors that should occur before a contract is enforceable. There should be existence of:



Consideration, and Intention. ( Oxford Learning, 2011).

To enhance a greater understanding of employment contract; the paper discusses the legislative precedents of employment and contract. (Oxford Learning, 2011).

Contract and Employment related to Legislative Precedent

Modern employment contract is primarily precedence of series of laws emanated several centuries ago that include

Ordinance of Labourers 1349

Statute of Labourers 1351,

Truck Acts.

However, it was in the 19th century that a real contract and employment contract was strongly established under the Master and Servant Act 1823.An employment contract in labor law attributes the right and responsibility between two parties such as employees and employer to bargain. The precedent of employment contract arisen out of the relationships between master and servant in the 19th century under the Master and Servant Act 1823. (Oxford Learning, 2011). The precedent of contract and employment was evolved under the common law formed hundred years ago based on the judge decisions. The case of Yewen v. Noakes (1880) provides an understanding of employment and contract that reveals master-servant relationship. The judge decision reveals that a servant is an individual who is subject to the command of his master, and master may command his servant to do jobs as he wishes. However, master-servant relationships are not much relevant under the modern employment law. (Oxford Learning, 2011). The Employment Right Act, 1966 defines an employee as an individual who accepts to carry out a work under a contract of employment. Various forms of employment contract enhance a greater understanding of the concepts employment and contract in the legal terms. (Oxford Learning, 2011).

2.1: Various forms of Employment Contract

Employee status under the employment contract enhances an understanding of forms of employment contract. Employment contract can be categorized as:

Contract of service for an employed person or Contract for service for a self-employed person. (Oxford Learning, 2011).

A worker employed by an organization is working under the contract of service as opposed to self-employed worker working under the contract for service. A worker is classified as employed by an organization when employed him or her under contract of service and enjoys valuable statutory benefits such as:

Rights to payment's redundancy,

Right to sick benefits,

Maternity leave,

Unfair dismissal remedies,

Industrial injuries benefits.

Contrarily, self-employed person is not entitled to these types of provisions.

However, there can be difficulties in making a distinction between self-employed workers or a fully employed. (Oxford Learning, 2011).

Various form of legislations and Acts inform term of employment contracts.

2.2: Description of Relevant Legislation and Act informing Employment Contract Terms

Employment Right Act, 1966 is one of the employment acts that describe an employee as an individual who accepts to carry out a work under a contract of employment. National Minimum Wage Act 1998 is an employment contract term that shows that an employee has the right to minimum wage of £6.31 per hour. Under the Pensions Act 2004, workers have the right to pension; however, under the Health and Safety Work Act 1974, an employer should provide a safe place for workers that should enhance heath and safety of workers. (Oxford Learning, 2011).

2.3: Evaluation of Contract Terms using Case Study Examples

Various contract terms could occur under self-employed contract term. The following tests have been able to provide distinction between fully employed and self-employed employment contract. Under the control test, the case "Narich Ltd. v. Commissioner of Payroll Tax (1884)," (Oxford Learning, 2011 p 13), the lecturer working with the Weighty Watchers had in his employment contract that he was a self-employed despite that the organization controlled all his working activities similar to employed person. (Oxford Learning, 2011). However, the control test has become outdated due to series of changes in employment contract. However, the Integration / Organizational Test are able to clarify between employment contract under self-employed and employed person. A case of Cassidy v. United Health (1951) reveals that the medical staffs is a part of the organization on the basis the medical staff is full employed by the organization. Moreover, under the case of Harrison Ltd. And Stevenson Jordan v.Evans and MacDonald (1952), the judge revealed that under the "Contract of Service," a man employed by an organization is part of the business. However, under the contract for service, the worker's work is done for business and is not integrated into the business and the work is just an accessory to the business. ( Oxford Learning, 2011).

The case of South East Ltd. v. Minister of Pension (1968) is the first case under the contract term that formulates multiple tests. The case determines whether a lorry driver, employed or self -- employed, is entitled to pay national insurance contributions: Under the contract:

1. A driver bought the lorry on hire purchase agreement and wear company insignia and color,

2. The lorry is also painted by the company logo and color,

3. To use the lorry for the company business only

4. The driver is to obey all company rules and order similar to employees.

5. Driver to be responsible for all repair's running and costs,

6. The driver can use a substitute driver, as the driver is not obliged to personally drive the lorry. ( Oxford Learning, 2011).

However, the driver is considered self-employed, despite that many features of contract of service existed.

Moreover, the case of O'Kelly v. Trusthouse fort Plc (1983) under the contract of term of Part Time/Casual Workers where a waiter was a casual worker of a hotel caused a degree of controversy because the judge actually refers the waiters as self-employed. (Willey, 2012).

3.1: Case study analysis Examining relationship between employer responsibilities and employee status

Employer responsibilities under the contract terms are the payment of contractual remuneration to employee. Moreover, employers are to take reasonable responsibilities on the health and safety of employees. It is the responsibilities of employers to pay wages to workers and a breach of this obligation can lead to expensive litigation. Under the case of Wilson v. English v. Clyde Coal (1938), the House of Lords laid down specific responsibilities of employers that include:

Safe place of work,

Safe plant & equipment,

Safe System of work,

However, the duty of employers is not absolute in nature; it is only that employers should act reasonably concerning a set of circumstances. Under the case between Latimer v AEC (1953), the factory was flooded due to heavy rainstorm. However, the employer took heavy precaution by placing sawdust on the floor to avoid unforeseeable slippery accident. However, one of the workers slipped and injured. Analysis of the case reveals that the employer did not foresee the injury incurred by Latimer. ( Oxford Learning, 2011). Although, a more prudent action was to close the factory for that day, however, the company could lose key customers because of this action if the company is unable to meet the key customer demand. (Armstrong, 2009).

4.1 Highlighting Legislative Process relating to Termination Scenarios

There could be a termination of employment due to various factors:


Frustration of the contract: When the employment contract come an end due to unforeseen circumstances that cannot be controlled. For example, the Condor v.Barron Knights (1966) case revealed the example of an employment contract that could not continue due to unforeseen circumstance. The drummer of a successful pop singer collapsed due to the problem of nervous system, and the contract could not be carried out. ( Oxford Learning, 2011).

Justifiable common law dismissal. Under the case of…

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