3.law A formal contract is a contract that has been created by the parties and the document is sealed using the seal of the parties (Miller, and Cross, 2012). As compared to the situation, when the parties have entered into an informal contract, the document is not signed under seal of the parties. In this regard, the seal can be any impression created on the document by the parties to the contract. In the past, generally, this was done in wax, which mentioned the intention of the parties to be bound by the terms of the contract. It also needs to be noted that the law of contract provides that only the parties to the sealed documents are considered as having certain rights under the contract. As a result of this position, only the parties to the contract are considered by the law as being liable under the contract. But these days, most of the contracts created between the parties are informal contracts. But it needs to be mentioned that the legitimacy of the contract is not decided by the fact if it is a formal contract or an informal contract. Therefore in both the cases, a contract can be legally enforceable if the other essential elements required for a valid contract are present. Generally, greater authorities like corporations or government entity into a formal contract. The former contract needs to be signed under seal. The examples of formal contracts can be given in the form of letter of credit and negotiable instrument.

 

 

4. On the basis of the facts that have been provided in this question, the issue arises if the group of friends have entered into a legally enforceable contract or if it was merely a social agreement, which could not be enforced by the law. In this case, a group of friends used to contribute $2 each for the purpose of purchasing a lottery ticket. One of the friends was given the responsibility to actually purchase a lottery ticket. When the winning ticket was purchased by them that particular friend refused to share the prize money. He claimed that the group of friends did not have the intention of entering regulations when they decided that the prize money will be distributed among them. However, the law of contract provides in such cases that in order to create a valid contract, among other elements. It is also necessary that the parties to the contract should have the intention of entering legal relations (Jones V Padavattan 1969). Therefore in such cases it is necessary that the party should have the intention that the terms of the contract should be enforced by the law (Merritt V Merritt, 1970). For this purpose, it is required that the contract should be interpreted for the purpose of giving effect to the intention of the parties as it has been mentioned in the agreement. In order to achieve this objective, usually, the court ascertains the intention of the parties objectivity. Therefore, for this purpose, the court considers the actual words that have been used in the agreement by the parties as well as the actions of the parties according to the agreement and all the circumstances concerned with the agreement. If it can be decided by any reasonable person, often considering all the above facts that the parties intended to create a legally enforceable contract, the court will enforce the terms of such a contract. The plain meaning rule is also used by the courts in this regard. Therefore, this rule provides that if a clear and unequivocal contract exists, such contract will be enforced by the courts. The plain meaning of the terms of the contract as mentioned in the contractual document will be considered and the court will not consider any extrinsic evidence or interpret the language of the contract. Under these circumstances, in this case also, a group of friends had contributed $2 each for purchasing a lottery ticket. This clearly shows that in this case, the group of friends had the intention of entering into a valid contract that can be enforced by the law. Therefore, they intended that the prize money would be distributed among all of them even if one person has been given the responsibility to purchase the ticket. Therefore in this case, the friend who had purchased the lottery ticket is under contractual obligation to share the prize money.

5. It is possible for the owner of a business to hire agents and independent contractors. Although in both cases, it appears that there is a simple matter of delegation. However, from a legal perspective, a number of implications are present regarding the difference between an agent and an independent contractor. Therefore the employees who have been hired by the business to work under the command of the owner fall under the purview of agents. But when help is hired to complete recurring or temporary tasks, such persons are considered as independent contractors. For the purpose of differentiating agents from independent contractors, the court basically looks at the level of control that a particular employer enjoys over the person who has been hired to do the work. In case the owner of the business has outsourced some work to a person or to another company that specializes in that work, generally it is conceded that such person or company is an independent contractor.

However, a fine difference is present between an agent and an independent contractor. Due to this reason, this issue has been the subject of a number of lawsuits. Generally speaking, an independent contractor can be described as a distinct and separate business. The independent contractor is required to provide services, but there is one direction and control. Similarly, the independent contractor has to decide itself the details, means and the manner of doing a particular task. On the other hand, anything can be described as a person or an entity that can be either an employee or an independent contractor who provide services to the principal one continuous basis. However, a completely independent third party can only be considered as an agent and nothing else.

Therefore the difference that exists between an agent and independent contractor can be understood on following grounds.

Agent: an agent has to work according to the control and supervision of the principal. Similarly, the agent is also under an obligation to follow the instructions that have been provided by the principal while performing a task. The law provides that the acts of the agent are considered to be binding for the principal.

Independent contractor: The law requires that an independent contractor has been followed the terms mentioned in the contract. Similarly, while performing the task, the independent contractor uses his own equipment, material and labor. Another difference is that the independent contractor does not have the capacity to bind the employer by his acts.

References

Miller, and Cross. “Chapter 11: Contract Law.” Business Law: Text and Cases. By Clarkson. 12th ed. Mason: Cengage Learning, 2012. 210

Case Law

Carlill v Carbolic Smoke Ball Company [1892] EWCA Civ 1

Chappell & Co Ltd v Nestle Co Ltd [1959] UKHL 1

Harvey v Facey [1893] UKPC 1

Hyde v Wrench [1840] EWHC Ch J90

Jones v Padavatton [1969] 1 WLR 328

Merritt v Merritt [1970] EWCA Civ 6

Pearce v. Brooks (1866) 1 Exch 213

Re McArdle (1951) Ch 669