Contract law. Учебное пособие
.pdfII. TYPES OF CONTRACTS
Read and translate the text
You’ll likely be a party to contracts in your everyday routine. Everything from eating at a restaurant to buying a home includes some form of a contract. The following are some of the most common contracts that are used.
Classification of contracts can be given according to: 1) formality (formal and simple contracts); 2) enforceability (valid, void and voidable contracts); 3) method of creation (express, implied and quasi contracts); 4) extent of performance (executed and executory contracts); 5) number of parties (unilateral and bilateral).
Formal contracts
The distinct difference between a formal contract and an informal contract is its enforceability in a court. An enforceable contract is one that contains certain elements, like offer, acceptance, and consideration, and is in written form. An informal contract does not contain the same elements and can be oral.
After a day’s worth of hardball negotiations over the sale of a high-rise condo, Jen and Aldo finally reached a price. Jen offered Aldo $200,000 for the classy condo andAldo accepted the offer.
Aldo typed up a written agreement, including:
•Jen’s offer of $200,000;
•Aldo’s acceptance of the offer;
•the collection of Jen’s $200,000, also known as consideration;
•the actual description, including lot, block, city, state, and anything included in the sale;
•date and signature lines;
•transfer of the title, changing owners fromAldo to Jen. Both Jen and Aldo were, of course, of sound mind (meaning
both parties were free of mitigating factors like mental illness or intoxication), and the contract contained terms that were lawful.
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What they had was a formal contract, which is legally binding and enforceable. If Jen changed her mind and decided not to pay for the condo,Aldo would have a strong breach of contract case against her for failing to take action on the promises of a contract.
The elements of a legally binding contract include an offer, like the price Jen was willing to pay for the condo and acceptance of the offer whenAldo agreed to the price. Once this occurs, there must be consideration. Consideration is the exchange of something of value. In this case, that was $200,000. Both parties must be of sound mind, and the terms of the contract must not violate any laws.
The last and most important element of a formal contract is in the recording of the contract. The sale is officially recorded by the change in title indicating the new owner’s name.
Not every contract requires such legal mumbo-jumbo. Some contracts are as simple as giving one’s word and a handshake.
Aformal contract must be in some special, written form in order to be enforceable in a court. Examples are commercial papers (documents confirming payment, receipts), contracts under seal. Seals served to validate agreements and may be any one of the following:
a)an impression on the document,
b)a paper or wax affixed to the document,
c)the word «Seal» or the letters «L. S.» (an abbreviation for the Latin words meaning «place for the seal») on documents.
To be enforceable, the following contracts must be only in writing and signed by the parties:
1)contracts to buy and sell goods for a price of $500 or more;
2)contracts to buy and sell real property or any interest in real property (land or objects attached to the land).As an exception to the general rule, a court will enforce the oral contract if the buyer has also done the following:
a)made partial payment;
b)occupied or possessed the land;
c)made substantial improvement to the land;
3)contracts that cannot be performed within a year (the year is figured from the time the contract is made, not from the time performance is to begin);
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4)gave something valuable in return for a promise of mar-
riage;
5)paid the debt or answer for a legal obligation of another per-
son;
6)contracts of an executor or administrator to be personally liable for the debts of an estate or someone who has died (an executor is a person named in a will, administrator is appointed by the court to settle affairs of a deceased person).
Main items of a written contract
Awritten contract has any forms and need not be only in a single writing, it may be printed, typed, or written with pen or pencil. The signature may be written by hand, stamped, engraved, or printed and any types of seal are possible.
Any legal written contract includes the following items:
1)names of the parties;
2)date and place;
3)the following material terms as the subject matter, price, method of delivery and terms of payment, insurance of goods or services;
4)rights and duties of the parties;
5)the signatures of the parties and a seal.
These items need not be in a special strict order and some of them may be excluded or omitted.
INFORMAL CONTRACTS
An informal contract, sometimes called a parol contract, is one that does not require a record and does not have to be signed, like ordering pork-fried rice at your favorite Chinese delivery restaurant. To elaborate, when you pick up the phone and call your order in and the order-taker at the other end agrees to accept the order, what you are really doing is entering into an oral agreement.
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Vocabulary
formality — формальность
formal contract — оформленный в письменной форме (формальный) контракт
simple contract — простой (неформальный) договор seal — печать
to be signed by — быть подписанным кем-либо real property — недвижимость
estate — имущество, поместье partial payment — частичная оплата transfer of the title — передача права an executor — исполнитель завещания
an administrator — попечитель над завещанием, назначенный судом
to make a will — составлять завещание
Exercises
1. Answer the questions: How are the contracts classified?
What is the form of a formal contract?
What does the word «seal» mean? What is the purpose of seal? When do contracts have to be in writing?
What is a form of the partial payments? What are the main forms of a written contract? What are the main items of a written contract?
2. Give the equivalents in Russian and make a written contract:
a)the name of the seller,
b)location of the company,
c)telephone,
d)fax,
e)buyer’s name and address,
f)date of agreement,
g)list of goods,
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h)quantity of goods,
i)price of goods,
j)place for delivery,
k)date of delivery,
l)insurance,
m)signature.
3.Answer and discuss the problems:
1)Your neighbors asked you to take care of their dog while they were in Italy for twenty days. They promised to pay you about $200. You agreed and they gave $100 as a down payment. Was it a formal or written contract? Do both you and your neighbors have to be responsible for the contract? What effect did this down payment have on the contract? Must this contract be in writing to be enforceable?
2)Brighton wanted to sell his old car. His friend Steve agreed to buy this car for $2 000 promised to pay for it in three weeks and took the car. Must this contract be in writing? Could Brighton still hold his promise to sell this car, if he got a better offer from someone else or change price? If it was in a written form, what essential items of the contract would be?
3)Stanley and Dawn purchased a home in Miami, Florida. When they arrived at the real estate closing, what type of contract they were asked to sign?
Read and translate the text
VALIDAND VOID CONTRACTS
A valid contract is a written or expressed agreement between two parties to provide a product or service.
In other words, a contract is enforceable when both parties agree to something, back the promise up with money or something of value, both are in sound mind and intend to carry out their promise and what they promise to do is within the law.
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There are contracts that do not contain all of the elements, and for those contracts, the courts make the determination as to whether the contract can be enforced.
A void contract is missing an element. In this case, the contract does not have to be terminated in court. It simply does not have to be executed, and both parties can walk away. Suppose Dennis offers to sell his neighbor’s dog to Jean. This would make the contract between the parties void because Dennis does not actually own the pooch. This means the sixth element, legal object, wasn’t present. It is illegal to sell another person’s personal property without permission.
VOIDABLEAND UNENFORCEABLE CONTRACTS
A contract that is a voidable sort of works the same way, but there is an option for the parties to enforce the terms even though an element is missing, or some other issue exists with the terms. The decision to enforce the contract is between the parties. In a voidable contract, one of the parties is legally bound to honor the contract. So, a voidable contract can be executed, even though there is an element missing, if the party not legally bound agrees to move forward.
Let’s say Jean and Dennis negotiated the dog sale over a few cocktails. This may change things. Capacity is an element that requires parties to be of mature age, free of mental illness and not intoxicated. If Jean wakes the next morning to the bark of a dog and doesn’t remember making the purchase, the contract may be voidable. In fact, there are several ways a contract may be voidable:
•one or both of the parties wish to terminate the contract because an element was not present;
•one of the parties was coerced into the contract.
In this case, Jean may ask Dennis to take the dog back and return her money. Dennis can return the cash and take the pup, or he can ask the court to decide. A good defense for Dennis may be to argue that Jean was not intoxicated at the time of the sale. Jean may con-
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tend that she was coerced by Dennis’offer to buy her several cocktails during negotiations.
Some contracts are simply unenforceable. This means when the contract terms are too confusing, unclear or lack several elements.
GUARANTEES
Sometimes the buyer is handed an impressive document called «guarantee» or «warranty». This document, the exact legal effect of which has yet to be determined, frequently offers the buyer certain rights, such as a twelve-month replacement of defective parts, and in returnpurports totakeawayfarmorevaluablerights.If itisgivenby the manufacturer it seems that a contract comes into force between manufacturer and buyer. If the buyer complies with the instructions on the guarantee, they deal with a signed copy. Such a contract, while it may deprive the buyer of his rights against the manufacturer in tort, does not affect the buyer’s right to sue the retailer under the Sale of Goods Act unless the retailer is a party to the guarantee or unless the contract of sale itself gives the buyer the benefit of the guarantee under the Sale of GoodsAct.
Vocabulary
valid contract — законный (действительный) контракт void contract — недействительный контракт
voidable contract — оспоримый контракт (может быть аннулирован одной из сторон)
to give consideration — предоставить возмещение ущерба to carry out the terms — выполнять условия
duress — принуждение, давление fraud — мошенничество
false representation — неправильное представление concealment — сокрытие, укрывательство
to counterfeit — подделывать unfavorable — нежелательный
capacity to contract — способность заключать контракт
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incompetent party — неправоспособная сторона undue influence — чрезмерное влияние disaffirm a contract — аннулировать, расторгать value — ценить
deprive the buyer — не обеспечить покупателя
Exercises
1.Harry and Joe were hanging around the bar when Harry proposed that Joe buy his boat for $500. Harry jumped at the chance to make the deal and paid him on the spot. Joe legally owned the boat, both are adults and nothing illegal was written into the contract. Joe delivered the boat three days later.The next week, Harry had regrets. What can Harry do?
a) Not much, it was a valid contract. Nothing in the scenario indicated that the parties were intoxicated or any other element was missing.
b) Harry can say that the contract negotiations took place at a bar so it is not a valid contract.
c) Harry can say that the contract is void because Joe did not deliver the boat until three days later making this an unnecessary delay in the transaction.
d) Harry can say that he was coerced because Joe knew how badly Harry wanted to be a boat owner. Harry has a right to return the boat if he no longer likes it.
2.Kawin was eager to get his house painted. He contacted Murphy. Kawin asked for a quote. After accepting the quote Murphy provided, Kawin asked that a contract be drafted and returned to him as soon as possible. The contract was signed and returned but Murphy never started the job. In the meantime, Kawin contracted with another painter. Does Murphy have a case?
a) No, because there was an unnecessary delay in performance of the promise to paint the house.
b) Yes. Murphy and Kawin had a contract.
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c)Yes. Kawin asked for the quote and a contract. There are no time limits on performance.
d)Yes. Murphy was willing to do the job. It just took longer than expected.
e)Yes. Kawin was trying to be slick with Murphy.
3.Sonny needed a few bucks to take his best girl out for a shake and fries. Since Sonny doesn’t work, he sometimes takes a few oranges from the groves on the side of the highway to sell to small grocery stores. One of the stores he sells to asked for a large quantity of oranges. Sonny drafted a contract for the sale of 10 bags of oranges in exchange for fifty dollars. What can the grocery store owner do if he finds out that Sonny is selling stolen oranges?
a)The owner can void the contract because the oranges are
stolen.
b)The grocery store owner has no recourse. It doesn’t matter where Sonny gets the goods.
c)The contract is unenforceable because Sonny took a while to gather up enough oranges for delivery.
d)It is a valid contract because Sonny delivered the oranges and can expect payment.
e)Oranges closest to the road are fair game to any person pass-
ing by.
4.Give Russian equivalents for:
Unenforceable contract, to invoke the law, to infer in a contract, lo undertake an obligation (liability), to attach a right to a party, valid contract, non-compliance with requirements, voidable contract, void contract, to be capable of, the option of a party, to confer rights on a person, to be destitute of a legal effect, to break the law, a contract capable of proof, to be properly stamped, to specify, on payment of a fine, hard times, breach of contract, to secure performance, to obtain damages, evidence, recognizance, to impose an obligation on a party, binding force, promise, penalty, to try a person upon a criminal charge, to admit of no dispute, special contract, deed, to execute a contract under.
5. Make the sentences with the expressions above.
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Read and translate the text
According to the way and method of creation, all contracts can be divided into express contracts, implied contracts and quasi contracts.
EXPRESSED CONTRACTS
There are two types of contracts: an expressed contract, which states the promises in clear language, and an implied contract, which is where behaviors or actions lead parties to believe an agreement exists.
Miguel wants to purchase his first home. He found the perfect place in Pasadena. The contract for purchase was signed, and he closed on the home within a month.
The contract Miguel entered into is an expressed contract because the elements are specifically stated, including offer, acceptance and consideration.
This is pretty straightforward. Miguel searched for a home, found the perfect place and accepted the seller’s offer to purchase. Once Miguel did that, he had to come up with the money to purchase the home. Both parties agreed to the terms, and are of age and mental capacity to enter into the contract, and there was nothing illegal about the sale. Miguel is now a happy homeowner.
IMPLIED CONTRACTS
An implied contract works differently. This type of contract evolves when no written contract is present, but circumstances may cause one person to become unjustly enriched as a result of their actions or an understanding exists.
There are two types of implied contracts:
•implied in fact,
•implied in law.
An example of each will help to explain the conditions necessary for each type of contract.
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