Section e Skimming reading

15. The text given below deals with the contract. Skim the text and answer to the following questions.

Before skimming the text see the notes, given below the text.

Time limit – 15 minutes

Be sure to know that the term “skimming “is “looking for a gist”.

Contract

A contract is a promise which the law recognizes as creating a legal obligation of performance. A promise creates such a legal obligation and thereby becomes a contract when the four elements previously stated have occurred. A minimum of two persons, called parties, are required in order to have a contract. The definition of contract requires a promise. Thus, we have the rule that a contract can be formed only if we have at least one promisee and at least two parties.

Types of Contract:

• Unilateral and Bilateral. Most contracts involve a promise in exchange for a promise. These are bilateral contracts and both sides are bound to carry yhrough on their promise. Some contracts are unilateral, which involve a promise for an act. Here, the promisor is not bound until the act is performed.

• Written or Oral. Although most contracts need not be in writing, putting the deal in writing is generally advisable. When there is a writing contract, it overrides any oral side deals. The law has some presumption that large deals will be put into writing.

• Express and Implied. Most contracts are expressed in words, written or oral. A contract may be implied, though, without any words whatsoever, if the circumstances and parties’ actions indicate that they contemplated a bargain.

• Void, Voidable or Unenforceable. A void contract is one without any legal effect, such as an illegal contract. A voidable contract is temporarily effective but can be voided by one side to the contract, such as a minor. An unenforceable contract is one that cannot be enforced in court for a reason such as the statute of limitations.

Conditions for contracts:

The law of contracts deals largely with identifying the exchanges that can be classified as contracts. Commitment is the essence of a contract. In addition, the following factors must usually be present for a contract to be valid and enforceable:

A contract is made if there is an offer and acceptance, consideration, competent parties, and legal subject matter. The transnational business contract between the parties should use plain language and be as simple, clear, and precise as possible so that the parties can operate under it without outside legal help. This is necessary for two main reasons. First, it is surprising to the uninformed how different the foreign political climate and concepts of doing business are from other foreign countries. Second, there is a wide difference in the meaning of business terms as used in different countries. The contract must meet these problems to the greatest extent possible. A few items will be considered.

The contract should be in writing.

There should be only one official draft in only one official language. If at all possible, the language should be English, Ukrainian or the contract should provide for a written “official” translation to be ratified by the parties for guidance and reliance in their contractual performance. Where it is necessary to have a foreign language in addition to Ukrainian, both language versions should be made “official”, if at all possible.

Because of differences in the meaning of words, particularly in the use of different languages, the contract should provide its own definitions of terms.

Both parties must give consideration. A contract is legally binding only when each party gives something of value to the other. This item of value, or consideration, may be money, goods, services or the forbearance (giving up) of a legal right. But the relative value of each party's consideration generally does not matter to the courts. Both parties must be competent.

The contract must be legal. The law will not enforce a promise that involves an illegal act. For example, a gangster cannot get help from the courts to enforce a contract to deliver illegal drugs at a prearranged price. Nor can a contract be enforced if one party signed under duress.

Every contract should have a “force majeure” clause. The clause should provide for those specified occasions beyond the control of the parties. A few examples are war, embargo, governmental prohibition of export or import of goods or technology covered by the contract, governmental expropriation, accident, fire, flood, and interruption of transportation. The clause should be detailed and complete.

Notes:

promise	обіцянка
promisor	особа, що дає обіцянку
promisee	кредитор
consumer	особа, якій дають обіцянку
purchase	купувати щось
executed contract	повністю виконаний контракт
executory contract	незавершений контракт
commitment	зобов'язання
consideration	компенсація
“force majeure”	форс мажорні обставини
embargo	заборона
offer	пропозиція, оферта
acceptance	акцепт, прийняття
competent parties	правомірні сторони (дієздатні)
duress	приму(с)шувати

1. What legal agreements are known to you?

2. What is a contract?

3. Why is it necessary to have a law of contract?

4. What purposes do contracts serve?

5. What types of contract do you know?

6. Does international trade really involve many documents?

7. What characteristics must a contract have to be legal?

8. What is consideration?

9. What is the “force majeure”?

Additional task