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

Execution Date

The “execution date” is the date on which a contract has been signed by all the necessary parties. This may or may not be the “effective date” of the contract, which may be specified in the body of the document. For example, Susan signs a lease agreement on April 3rd, with a move-in date of May 1st. The execution date of the lease isApril 3rd, but the effective date is May 1st.

Examples of Executed Contracts

  John has been looking ata TV he wants to purchase.After deciding togoforward with the purchase, John walks into the electronics store and pays for the TVin cash. John walks out ofthe store with the TVand the store has the full payment.This contract isconsidered executed since the TV was paid for in full and all terms of the contract were met.

  Jack has been looking at a car he wants at a car lot, debating whether to buy it. Finally deciding to make the purchase, John walks into the dealership, signs a purchase contract, pays for the car in cash, and walks out with the keys to the car.

  Adomestic services company calledAll Fixers Co. is currently disputing with a customer the terms of a previously signed contract. Mr. Fergusson is the person affected by the conflict and his argument is that All Fixers stated that a given electric maintenance service will be completed by February 2. The service agreement was signed in January 28 and the agreement clearly states that the service will be executed in February 1.

Nevertheless, the contract doesn’t state how long it will take for the service to be fully executed. It just states the date of the signature and the date of execution. Mr. Fergusson’s lawyer reviewed the agreement and concluded that it is an executed contract, since both parties signed and agreed on it. He also identified that the execution date was January 28 and the effective date was February 1. Since the contract doesn’t state when the service will be fully completed, Mr. Fergusson complain doesn’t have a legal basis. That means he has to wait until the service can be finished.

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Basics of Executing a Contract

The basics of executing a contract begin with reading and understanding all of the contract’s provisions, including any fine print, and portions of the contract stated to be on another document. If the contract binds the individual or entity to a significant expense or service, it is often worth the time and expense to have an attorney review the contract before signing.

Understanding Contract Terms

Understanding contract terms includes understanding the difference between the contract’s execution date and effective date, if applicable, to prevent confusion in the future.Any changes to a contract agreement must be made in writing and signed by all parties before the changes take place. Because an executed contract is a legal document, each party should keep a copy and refer to it, if necessary, to fulfill their obligations completely. If one party fails to fulfill his obligations, the other party may be able to file a civil lawsuit. For example, if John fails to make the agreed lease payments on his car, the dealership could not only repossess the car, but could sue John in civil court for the remaining amount owed under the lease.

Related Legal Terms and Issues

  Entity – something with distinct and independent existence, such as a company, agency, or organization.

  Civil Lawsuit – a case in which a person who feels he been wronged brings legal action against another person or entity to collect damages from the person who wronged them.

  Legal Jargon – unnecessarily complicated or technical language used in contracts or detailed documents.

Executory vs. Executed Contract

An executed contract is a contract that is fully legal immediately afterallpartiesinvolvedhavesigned,andthetermsmustbefulfilledimmediately. With an executory contract, the terms are set tobe fulfilled

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at a future date. Both contracts however, are considered executed agreements once the parties sign. This means that both parties are legally obliged to follow the terms as and when defined within the agreement.

While any type of contract must be “executed” by the parties by adding their signatures to it, some people and entities refer to a contract for which the terms are to be carried out at a later date by the specific name of “executory contract.” This may create some confusion for the layperson when hearing the term “executed contract,” which may simply refer to the fact that the contract has been signed by all parties, or may refer to a signed contract for which the terms were immediately carried out.

One example of this type of “executed contract” would be a contract for purchase of a major appliance. This contract is entered into, and the appliance is immediately delivered.An example of an “executory contract” may beacontract with ageneralcontractorfor the constructionofahouse,forwhichtheworkistobegininfourmonthstime. The important thing tounderstand isthat, ineither case, once acontract has been signed by all the parties, it becomes legal and binding.

MORE ON EXECUTORY CONTRACTS

Executory contracts can take several forms, including a franchise agreement, long-term supply contract, etc. However, executory contracts do not usually include a contract that has expired, a sale that has been completed, a promissory note, a single purchase order, etc.

Exclusive licensing and perpetual licensing are sometimes treated more like completed assignments of rights or territories rather than executory contracts.To determine whether or not an agreement is executory,anyongoingobligationsofthepartiesmustbetakenintoaccount.

Executory contracts are legally enforceable even if the terms of the said contract are not fulfilled immediately. Therefore, it is imperativethatyoushouldallyourcontractualobligationsthathavebeen made in the contract. Generally, the use of these contracts is especially beneficial when purchasing the most expensive items. In such a case, it is easier for consumers to pay for items over time instead of having to make one large payment upfront.

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UNIT 6

T Y P E S O F C O N T R A C T S O N T H E B A S I S O F N A T U R E O F C O N S I D E R A T I O N :

B I L A T E R A L C O N T R A C T S

A N D U N I L A T E R A L C O N T R A C T S

Definition Of Bilateral Contract

A bilateral agreement is one of the most common contract types in the business world. To put it simply, this is a mutual agreement where each of the involved parties agrees to perform an act. Whether you realize it or not, you enter into bilateral contracts all the time. Each time you make a purchase in a store or eat in a restaurant, you are creating a bilateral contract with the seller.

Our general product contract is an example of a bilateral contract, and can be used if you are purchasing or selling goods with another party.

Definition of Unilateral Contract

Aunilateral contract is when a person accepts an offer by performing a specified act. For example, many people will put up neighborhood fliers for lost pets and state that whoever finds their pet shall receive “x” amount of reward money. In this type of contract, acceptance, performance and completion are simultaneous. Only upon the return of the missing pet is the contract completed. Law requires the individual who made the offer, to pay the reward (only if, of course, the person saw the reward sign first, and was not simply acting altruistically).

Depending on the type of agreement you require, you may want to consider hiring a lawyer to help you draft your contracts.

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Examples of bilateral contract

When most people think of contracts, bilateral agreements come to mind. In its most basic form, a bilateral contract is an agreement between at least two people or groups. Most business and personal contracts fall into this category.

  Bob pays Sam $1,000 to install sprinklers in his yard. This seems like a unilateral contract in which Bob is obligated to pay the money only if Sam accepts by installing sprinklers. There exists a question of just what constitutes completion or performance under this type of contract: the act of beginning the installation, or the completion of the job to a standard satisfactory to Bob? In response to these issues, the courts generally hold that, when Sam begins the installation, the contract is converted to a bilateral contract that requires both parties to perform certain actions. Sam must provide the complete service of sprinkler installation, for which Bob must pay $1,000. Modern courts have moved from applying strict unilateral vs. bilateral concepts to contract disputes, focusing instead on the intended result or outcome of each contract.

  If Cindy agrees to watch neighborAmanda’s children on Monday and Wednesday, and Amanda agrees to watch Cindy’s children on Tuesday and Thursday, a bilateral contract has been entered into, where each party offered consideration. The gain or profit of the contract is a couple of quiet

  IfCindyagreestowatchneighborAmanda’schildrenonMonday andWednesday, andAmanda agrees towatch Cindy’schildren onTuesday and Thursday, abilateral contract has been entered into, where each party offered consideration.The gain orprofit ofthe contract isacouple of quiet afternoons for each mother. If, instead, Cindy offered Amanda $10 for each afternoon she watched Cindy’s children, a unilateral contract is created, in which Amanda only receives, and Cindy is only obligated to pay the money ifAmanda watches the children.

  In the example of Ted’s dog, the contract would be bilateral if Sara enters into an exclusive contract with him to search for the dog, as each party would then be under an obligation. The main distinction between bilateral and unilateral agreements is that a bilateral agreement creates a reciprocal obligation. Sara is now obligated to look for

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the dog and could beinviolation ofthe contract for failing todoso.Ted is also under an obligation, as he would pay Jill $200 for the dog’s return, and he cannot offer the same agreement to outside parties.

Examples of unilateral contract

Unilateral contracts are very different from bilateral contracts, sothismaybekindofadifficultconcepttogetthehangof,solet’slook at an example.A reward contract is a common unilateral contract that we see often in daily life.

  Susie has lost her cat. Susie offers Billy $100 if he finds her cat. This is a unilateral contract because Susie is only obligated to pay the $100 if, and only if, Billy finds the lost cat. However, Billy is under no obligation to find the lost cat –technically, he has only accepted the offer once he finds the lost cat.

Some states have specific requirements regarding unilateral contracts. For example, in some areas, Susie may be legally obligated to keep her offer open if Billy begins making sufficient efforts towards finding the lost cat (maybe he put up posters, maybe he’s been asking around at local shelters).

  Jim offers a unilateral contract to pay Shelley $3,000 if she puts Jim’s boat into storage. Shelley has no legal obligation to store the boat, but if she chooses to, Jim has to pay her the $3,000.

  Eric tells Julia that he will pay her $20 if she washes his car. Eric does not want a promise to wash the car. Julia can accept Eric’s offer by beginning to wash his car. Julia is not obligated to wash the car unless or until she begins doing so. Further Eric is not obligated to pay Julia until she begins washing the car.

Are Unilateral Contracts Legally Enforceable?

Unilateral contracts may seem very one-sided, but they are generally enforceable in court. The most common issue occurring with unilateral contracts happens when the offeror fails or refuses to keep their promise even when the other party completes the required action.

Both unilateral and bilateral contracts can be “breached,” orbroken. An example of breaching a unilateral contract might be if Susie refuses

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to pay Billy the $100 when he finds her lost cat. In that case, she has broken her promise to pay, and can be considered in breach of contract.

Whether the contract is unilateral or bilateral, if you have a situation that you think constitutes a breach of contract, you will need to establish certain elements.

The Contract Existed: If there was no contract to begin with, then it can’t be broken;

The Contract was Broken: If the contract hasn’t been broken, there is no cause of action;

You Suffered a Loss: If you haven’t suffered a loss of some sort, there is nothing for the court to correct; and The Person You’re Challenging was Responsible: You need to make sure that you are challenging the right party. Usually the party making the promise is likely to be responsible.

Key Differences between Bilateral Contracts and Unilateral Contracts

The easiest difference to spot between unilateral and bilateral contracts is the number of parties making promises – one in unilateral contracts, while bilateral contracts need at least two parties making promises.

The difference between the two types of contracts can be very subtle. Let’s look at Susie and her lost cat once again. Say Susie promises Billy $100 if he promises to find her lost cat. If Billy accepts her offer and promises to find Susie’s cat, this is considered a bilateral contract. Both Susie and Billy have made promises to do certain things.

They are now both legally obligated to perform the required actions under this bilateral contract. Even if Billy is not successful in actually finding the cat, Susie will be obligated to pay him the $100, especially if Billy made reasonable efforts to find the poor kitty.

Again, the difference is very subtle, but it helps to look at what is being offered in the contract. In a unilateral contract, the offeror is offering to pay for the completed action. However, in a bilateral contract, the offeror is offering to pay for, the other party’s promise to perform the action. In a unilateral contract, the action must be completed in order to obligate the offeror to pay.

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Both unilateral and bilateral contracts are enforceable incourt. For example, a unilateral contract is enforceable when someone chooses to begin fulfilling the act demanded by the promisor. A bilateral con- tractisenforceablefromtheget-go;bothpartiesareboundthepromise.

MORE ON UNILATERAL AND BILATERAL CONTRACTS

Bothtypesofarrangementsbindthepartieslegally.Thismeansthe law enforces the entities to fulfill the contractual obligations, or else, they may have to bear legal consequences. The two contracts involve two essential elements. These are a promise and consideration.

While bilateral agreements are widely used in business, unilateral contracts are more common in our day-to-day dealings. From the business point of view, bilateral contracts protect the interests of both parties – the offeror and the offeree. In addition, it builds trust and confidence between two entities since all the provisions are mutually decided between them.

Suggested activities

Frequently asked questions

Q: What are the basic elements of a bilateral contract?

Ans:The basic elements include promisor, acceptor, offer, consideration, legal capacity, and legal terms.

Q: Is a bilateral contract legally binding?

Ans: It is a legally binding agreement. The promises bind both parties, and the contract is enforceable in court, given the contract is drawn up correctly or contains the components of a valid contract.

Q: How is a bilateral contract formed?

Ans: It is formed when both parties exchange obligations to carry out and fulfill their part of the agreement. Since it transforms both parties into what is known as an “obligor,” or a person or party who is committed to another, this contract type is one of the most often utilized binding agreements.An obligor has violated the bilateral contract if they don’t fulfill their obligation in line with the contract.

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UNIT 7

T Y P E S O F C O N T R A C T S

O N T H E B A S I S O F V A L I D I T Y

VALID CONTRACTS

Definition Of Valid Contract

Valid contracts have all the required elements and are legally enforceable in court. A Valid Contract must involve at least two parties identified by the contact. One of these parties will make the proposal and the other is the party that shall eventually accept it. Both the parties must have either what is known as a legal existence e.g. companies, schools, organizations, etc. or must be natural persons. Parties are legally responsible for performance in the contract. If one party commits breach of contract, the other can take the case to court.

In many cases, signing on the dotted line obligates you to perform to the contract, but there are instances that cause contracts to be unenforceable in a court of law. In the field of contract law, there are many variables that go into making a contract valid or not. Things may become complicated when you try to understand what makes an agreement legally binding.

Examples of valid contract

  One person announces that she will sell her cell phone for a reasonable price.Another person quickly says, “I will buy it”. In this case there is not a valid contract because there is not enough specificity in the consideration. As such, a critical piece of the contract is missing. While the parties might think they have a contract, if a challenge to the contract arises, a court is likely to hold it to be invalid.

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  In the case State of Gujarat vs Ramanlal S & Co. – A business partnership was dissolved and assets were distributed among the partners as per the settlement. However, all transactions that fall under a contract are liable for taxation by the office of the State Sales Tax Officer. However, the court held that this transaction was not a sale because the parties involved were business partners and thus joint owners. For a sale, we need a buyer (party one) and a seller (party two) which must be different people.

  Q: A agrees to help B build his house since they are friends. Is this a contract?Ans: No this is not a contract. There is intention betweenAand B to create a legal relation, which is an essential of a contract. Hence, this is not a contract in the eyes of the law.

Essential Elements of a Valid Contract

Offer andAcceptance

Basically, a contract unfolds when the other party accepts an offer by one party. The accepted offer should be without any qualification and be definite. An offer needs to be clear, definite, complete and final. It should be communicated to the offeree. A proposal when accepted becomes a promise or agreement. The offer and acceptance must be ‘consensus ad idem’ which means that both the parties must agree on the same thing in the same sense i.e. identity of wills or uniformity of minds.

Intention to Create Legal Relationship

The intention of the parties to a contract must be to create a legal relationship between them. Agreements of social nature, as they do not contemplate legal relationship, are not contracts. For instance, if a father fails to give his daughter the promised pocket money, the daughter cannot sue the father, because it was purely a domestic arrangement. Thus, it is clear that all agreements, which do not result in legal relations, are not contracts.

Capacity to Contract

If an agreement is entered between parties who are competent enough to contract, then the agreement becomes a contract.

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