Guide to Legal Contracts = Английский язык для юристов договорное право. Учебное пособие по английскому языку для студентов юридических вузов

UNIT 2

S T E P S

I N C O N T R A C T D R A F T I N G

As previously mentioned, contracts are an essential part of running a successful business. Every contract can be different in terms of objectives and terms, but the drafting process mostly follows the same basic steps.

1.  Determine if all parties can participate

Drafting a contract is pointless if it cannot be enforced on all parties. This rule is in place to protect those who may lack the expertise and knowledge on a certain situation from getting taken advantage of. This means if they choose to sign a contract, that contract will not be legally binding.

Minors, those under the age of 18 in most cases, do not have any capacity to enter into a contract. Those who are judged to be not mentally fit also may not enter into a contract. In most cases, what determines if someone has the mental capacity to sign a contract is whether they fully understand the meaning and the effects of the words within the contract or just the transaction itself.

2.  Determine the consideration

Consideration refers to what will be exchanged due to the contract.This could be in the form of goods or services or any other promise of compensation. A few examples include creating or designing a piece of work, developing software, transferring ownership of a car or a house, or just simply paying money. It can also be a promise to refrain from doing something such as not building a property over a specific height.

Considerations should always be clearly stated. Without this, a contract will not be valid.

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3.  Determine the contract’s terms

Once the considerations are agreed upon, the terms of the contract should allow all involved parties to receive their desired end goal which must arrive with no ill faith.This means no attempt at deception can be made.

Contract terms also state when the considerations must be met. Here’s an example of a term in a contract: Contractor shall maintain such books and records for (insert name’s) review for at least six years beyond the Term of the Contract unless (insert name’s) authorizes a shorter period in writing.

4.  Consider using a confidentiality clause

Oftentimes when a contract is being drafted, intellectual property such as trade secrets or other confidential information is involved, which is why using a confidentiality clause is recommended.

A confidentiality clause acknowledges that sensitive information will be shared and ensures that both parties take measures to protect the confidential information. This helps to keep confidence in the execution of the contract.

Here is a sample of what a confidentiality clause could look like:

The parties hereto agree that each shall treat confidentially the terms andconditionsofthisAgreementandallinformationprovidedbyeach party to the other regarding its business and operations. All confidential information provided by a party hereto shall be used by any other party hereto solely for the purpose of rendering or obtaining services pursuant to thisAgreement and, except as may be required in carrying out this Agreement, shall not be disclosed to any third party without the prior consent of such providing party.

5.  Determine the contract clause termination

The termination of the contract clause is the length or duration of the contract.

It is very common for business contracts to end due to negligence claims therefore you should state what consequences are on the line.

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Other important things to state would be what types of actions can lead to premature termination and what actions will be taken if for any reason there needs to be a premature termination of the contract. All of these would refer to a dispute resolution clause.

6.  Offer the contract up for acceptance

The next steps are very straightforward. Once the contract is drafted, you can offer it to the other party who can either choose to accept or deny it. If they accept, you may move on to the final step of signing. Otherwise, you may make a counteroffer.

If the other party makes a counteroffer to your initial contract draft, you can either accept that counter offer or provide your own counteroffer in response.

7.  Sign the contract

A contract is not valid or enforceable unless every involved party signs it. Once a final offer has been agreed upon by all parties, you should conclude the contract drafting process by making all parties sign and date the contracts.

It does not matter who ends up signing first or last as the order of signing does not provide any advantages to any party. Once signed, both or all parties should each obtain a copy of the contract.

Points to Remember

contractor

A contractor is in a legal sense one who enters into a binding agreement to perform a certain service or to provide a certain product in exchange for valuable consideration, usually money but sometimes other goods or services in a barter arrangement.

In the building trades, a contractor is one who is engaged in the construction of a building or buildings for a client. The construction site is often overseen by a general contractor, who may perform the work entirely through the efforts of himself and his employees or who may employ subcontractors to perform some or all of the work.

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offeror and offeree

Offeror is a person or entity who makes a specific proposal to another (the offeree) to enter into a contract. Offeree is a person or entity to whom an offer to enter into a contract is made by another (the offeror).

Why can‘t an offeror revoke an offer for a unilateral contract once an offeree has begun performance?

promisor and promise

Promisor is a person or entity who makes a promise or a contractual commitment. The promisor is often referred to as the obligor.

Promisee is a person or entity to whom a promise has been made The promisor is the party that makes the promise, while the promisee is one the receiving end of the promise.

Consideration is either some detriment to the promisee (in that he may give value) or a benefit to the promisor (in that he may receive value).

equitable remedies

Equitable remedies are judicial remedies (specific performance, injunction, rescission, rectification) developed by courts of equity from about the time of Henry VII (dating to the twelfth century) to provide more flexible responses to changing social conditions than was possible in precedent based common law. Equitable remedies are awarded when a legal remedy such as money damages cannot adequately redress the injury.

forbearance

Forbearance is the action of refraining from exercising a legal right, especially enforcing the payment of a debt, e.g. deliberately choosing not to claim for a debt.

Forbearance may take the form of extra time allowed to come up with the overdue payment in return for the borrower‘s promise to make regular payments in the future.

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UNIT 3

F O R M A T I O N O F A C O N T R A C T

A contract consists of one individual making an offer, another accepting the offer, and the existence of consideration between the contracting parties.

OFFER

An offer is the expression of a willingness to enter into a bargain. An offer must be directed to a particular offeree and be sufficiently clear so as to justify another individual in the belief that acceptance of the offer would constitute an agreement.Although an offer need not set forth all terms of the potential bargain (even the price may be left to be later determined), a valid offer must identify the fundamental elements of the proposed agreement. An offer may be revoked at any time before it is accepted or before it is reasonably relied upon by another individual.

ACCEPTANCE

Acceptance of an offer is the communication by the offeree of mutual assent, that is, the agreement to be bound by the terms of an offer. An offer may be accepted only by a person to whom the offer was directed and only before the offer terminates or is revoked. Avalid acceptance must be communicated to the offeror by the same or similar means under which the offer was communicated, and must be unequivocal to make the agreement binding. At common law, it is generally held that any deviation from the terms of the offer is not an acceptance, but rather a rejection and a counteroffer. If the offer identifies a specific mode of acceptance, such as form, date, time, or place, that mode must be followed for an acceptance to be valid.

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Generally, an acceptance is not effective until it comes into the possession of the offeror, although some states employ the mailbox rule, which makes acceptance sent by U.S. mail effective upon its deposit in the mail. If an offer specifically invites acceptance by performance of a specified act, performance of that act by the offeree constitutes acceptance without notification of the offeror. Except in very limited circumstances, such as where the parties have a pattern of previous dealings or where it would be inequitable to find otherwise, silence does not constitute acceptance.

CONSIDERATION

An offer and acceptance alone do not create a valid and binding contract. A third element, consideration, must exist. Consideration is a bargained-for exchange, that is, the existence of mutuality of obligation. Both parties must derive some benefit – or, alternatively, both parties must experience some detriment or forbearance – for a contract to exist. Without consideration, an offer and acceptance rep¬ resent merely a naked, unenforceable promise. While the existence of consideration is critical to the enforceability of a contract, the quantity or quality of consideration is immaterial. Generally, courts are not concerned with the value or adequacy of consideration and will not interfere with a bargain entered into between the parties because of insufficient consideration. Certain acts or forbearance cannot constitute consideration. A preexisting duty to perform or refrain from performing may not be consideration for a contract. Therefore, fulfilling an existing contractual obligation or refraining from an unlawful act cannot constitute consideration.An exception to this rule is that the agreement to pay a preexisting debt may be consideration. A promise to make a gift is not consideration, nor is a moral obligation. A promise not to sue, so long as the right to sue actually exists, may be consideration.

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Suggested activities

1.  In the above text explain the meaning of the words and phrases in bold.

2.  Complete the following sentences using the required information from the above text.

1) A contract is a promise or a set of promises for the breach of which the law … .

2)  In medieval England, the courts did not engage in … . 3) Acontract consists of one individual making … .

4) An offer is the expression of a willingness to … .

5) Avalid offer must identify the fundamental elements of … . 6) An offer may be revoked at any time before … .

7) An offer may be accepted only by a person to whom … . 8) An offer and acceptance alone do not create … .

9)  Considerationisabargained-forexchange,thatis,theexistence of … .

10) Apromise to make a gift is … .

TERMS OF THE CONTRACT

Contracts consist of various statements, promises, stipulations, etc. grouped together under the word “terms”. The terms may be expressed or implied. It is the terms of the contract which determine the extent of each party’s rights and duties and the remedies available if the terms are broken are determined by the comparative importance of the terms.

Certainty. A contract may be void if the terms are not reasonably certain. In commercial transactions, the court may be prepared to enforce an ostensibly vague agreement by reference to trade custom or any previous dealing between the parties. It is possible that the parties themselves may provide the machinery for resolving an apparently uncertain terms, such as where the price of land is to be fixed by valuers appointed by the parties. If an uncertain term is actually

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meaningless, then exceptionally the court may be prepared to sever the provisions if it is clearly superfluous.

Parol evidence rule. There is a general rule, “the parole evidence rule”, that where a contract is embodied in a written document, then extrinsic (parol) evidence is not admissible to add to, vary, subtract from or contradict the terms of the written document. Extrinsic evidence is not confined to oral statement but can extend to written matter such as draft contracts and correspondence. This rule proved to be rather inconvenient and even unjust and the courts have evaded it by creating a number of exceptions. The main exceptions to the parol evidence rule are:

1)  custom;

2)  operation of the contract;

3)  validity;

4)  evidence as to suplementary terms;

5)  rectification;

6)  collateral contract.

Helpful words and notes

terms – условия договора

stipulation – условие, оговорка; соглашение, пункт соглашения express terms – прямо выраженные или явно выраженные условия implied terms – подразумеваемые условия

extent – объем, диапазон, степень, размер

certainty – несомненность; несомненный факт; уверенность transaction – cделка

trade custom – торговый обычай dealing – сделка, операция

provide the machinery for – обеспечивать механизм для чего-л.. sever – отделять/отделить; разрывать/разорвать

provision – условие, постановление, положение договора superfluous – излишний

parole evidence – устные доказательства (не содержащиеся в документе за печатью)

be embodied in a written document – быть воплощенным в письменном документе

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extrinsic – посторонний; не присущий, несвойственный vary – менять, изменять

subtract – вычитать, вычесть

contradict – противоречить, опровергать draft contract – проект контракта

operation of the contract – юридическая сила/юридическое действие контракта validity – юридическое действие/срок действия suplimentary terms – дополнительные условия

rectification – исправление, поправка; внесение поправки, исправления; устранение ошибки

сollateral contract – дополнительный контракт

REPRESENTATION AND TERMS

Statementsmadebythepartiesinthecourseofnegotiationsleading up to the formation of the contract are classified by the court as either representations or terms.Arepresentation is a statement which induces the contract but does not form part of it, whereas a term is a promise or undertaking that is a part of the contract itself. If a representation proves to be false, the remedy will lie in an action for misrepresentation, whereas if a term is broken the remedy will lie in an action for breach of contract. In some cases, a misrepresentation later becomes incorporated into the contract as a term. In such a case the injured party will have two causes of action: one for misrepresentation and the other for breach.

Whether a statement is a representation or a term is primarily a question of intention. If the parties have indicated that a statement is to be regarded as a term, the court will implement their intention. In other cases, the following guidelines may be applied:

1. A statement is not likely to be a term if the person making the statement asks the other party to check or verify it, as where the seller of a boat 159 stated that it was sound but asked the buyer to have it surveyed. If the statement is made with intention of preventing the other from finding a defect and succeeds in this, the court may consider it to be a term.

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Where there is a distinct interval of time between the making of the statement and conclusion of the contract, this may indicate that the parties do not intend the statement to be a term.

2. A statement is likely to be a term if it is such that the injured party would not have entered into the contract had it not been made.

3.  Where one of the parties possesses superior knowledge and skill relating to the subject-matter, the court may conclude that any statement made by such a party is a term.

4.  Where the agreement has been reduced to a written document, statements appearing in the written contract will normally be regarded as terms. Subject to the matters discussed above, statements excluded from the written contract are likely to be regarded as representations. Nevertheless, the court will look to the intention of the parties to see whether they intended a contract partly written and partly oral.

Helpful words and notes

statement – заявление, изложение, утверждение representation – только сообщение/информация induce – вызывать; индуктировать; побуждать undertaking – обязательство, гарантия undertake – обязываться; брать на себя

action – иск; судебное преследование misrepresentation – введение в заблуждение

incorporate – включать; инкорпорировать, предоставлять права юридического лица

cause of action – основание для предъявления иска

have a cause of action – иметь основания для предъявления иска indicate – показывать, указывать

guideline – директива

verify – проверять, выверять, сверять verification – проверка, подтверждение survey – осматривать

subject-matter – предмет спора, договора и т..д.. conclude (about) – решать, делать вывод

be reduced to written document – быть составленным в качестве письменного документа

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