Английский язык. Профессиональная лексика для юриста. Учебное пособие

is worthless, because they might not be around any more. Almost all agreements contain a merger clause which states that anything that was said or written before the agreement was signed does not matter unless it’s explicitly written in the agreement.

c) Read the text again and answer these questions.

What do you think the speaker means by horse-trading?

What does the speaker say about the purpose of a merger clause?

Exercise 6. Use the scheme to talk about the main elements of a contract. Begin the explanation of each element with the definition.

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TEXT B. Remedies for the Breach of Contract

Read and translate the text. Get ready to discuss its main points.

Remedy is any of the methods available at law for the enforcement, protection, or recovery of rights or for obtaining redresses for their infringement. When there has been a breach of contract, the non-breaching party will often seek remedies available under the law. This area of the law, known as ‘remedies’, is a broad area, but can be summarized generally.

The court must be satisfied that there was a contract, that one party is in breach, and that the other party has suffered some loss because of the breach. If all these conditions are fulfilled, the court must then decide how the party in breach must compensate the other party. The remedies for the breach of contract are damages, a specific performance order or an injunction.

An award for most damages – money claimed as compensation for lost – is the primary remedy for a party who suffers the breach of contract, but non-monetary relief is also available in some cases. The basic remedy for breach of contract in the Anglo-American legal system is pecuniary compensation to an injured party for the loss of the benefits that party would have received had the contract been performed. Some examples of this kind of remedy include expectation damages or ‘benefit of the bargain’ damages. Certain damages are recoverable regardless of whether the loss was foreseeable, while the recovery of other damages hinges on foreseeability. Where the damage is the direct and natural result of the breach, the breaching party will be held liable to pay damages for such without regard to the issue of foreseeability. When lawyers plead these damages in court, they commonly refer to general damages. However, where the damage arises due to the special circumstances related to the transaction in question, damages are limited by the foreseeability rule, which states that they are only recoverable when it can be established that the damage was foreseeable to the breaching party at the time the contract was entered into. When lawyers plead these damages in court, they commonly refer to special or consequential damages.

Where it is not possible to prove expectation damages, the nonbreaching party can seek reliance damages, where the compensation is the amount of money necessary to compensate him for any expenses incurred in reasonable reliance on the contract. The nonbreaching party is thus returned to the status quo ante with no profit or benefit from the contract.

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Another measure of damages is restitution damages, which compel the breaching party to give up any money benefit it obtained under the breached contract. Restitution damages are, for example, awarded when one party (the breaching party) completely fails to perform its obligations under the contract.

The parties to a contract may, however, agree at the time they enter into the contract that a fixed sum of money shall be awarded in the event of a breach or to a formula for ascertaining the damages or for certain other remedies, e.g. right of repair. This type of damages is known as liquidated damages or stipulated damages.

In some cases, a party will be able to obtain punitive or exemplary damages through the court which are designed to punish the breaching party for conduct which is judged to be particularly reprehensible, e.g. fraud. This type of damages is normally only awarded where specifically provided by statute and where a tort in some way accompanies the breach of contract.

Where monetary damages would not be an adequate remedy, such as in a case where two parties enter into a real-estate contract and the seller decides to sell to a third party, the court may order specific performance. Specific performance involves an order by the court compelling the breaching party to perform the contract.

An injunction either prohibits a person from doing or continuing to do a certain act (a prohibitory injunction) or orders him to carry out a certain act (a mandatory injunction). Specific performance and injunctions are equitable remedies developed by the courts of equity and will only be granted if a) damages are not an adequate remedy and b) if the court can adequately supervise enforcement. Both remedies are discretionary, that is, they will be granted only if the court considers it just and convenient to do so.

Finally, there are other remedies available; for example, if there has been a default by one party, the other party may rescind or cancel the contract. This constitutes an undoing of the contract from the very beginning. In addition, legislation such as sale of goods legislation also allows for various remedies, including a right to reject goods in certain cases and a right to return or demand repair or replacement.

Exercise 1. Mark the statements which are true. Prove your idea.

1.According to the foreseeability rule, damages are awarded when it can be proven that harm or injury could have been seen or known in advance by the breaching party when the agreement was made.

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2.The non-breaching party is entitled to a remedy for the breaching party’s nonperformance of an enforceable contract.

3.Reliance damages are recovered when the breaching party is forced to give up profits it acquired under the breached contract.

4.Exemplary damages are collected from the breaching party as a kind of punishment for particularly objectionable behaviour.

5.Liquidated damages are fixed in advance by the parties to a contract as the amount of money to be paid in the event of breach.

Exercise 2. Match these types of damages (1–7) with their definitions (a–g).

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Exercise 3. Read the article about the liquidated damages and fill in the missing parts of the text from the box. How are liquidated damages described?

Liquidated damages

1. …

When parties 1.__a contract, they often wish to calculate the 2.__ which would arise for one or both of the 3.__in the event of that there is a breach of contract by the other party. 4.__in a contract stipulating the amount required to 5.__an 6.__party in the event of a breach are referred to as “liquidated damages” clauses. The 7.__of liquidated damages clauses is for the non-breaching party to avoid the costs which arise in the difficult task of proving the amount of the loss actually incurred. Such clauses are 8.__where they are carefully drafted to compensate the non-breaching party for the 9.__caused by the breach.

2. …

A contractual party may, in certain instances, try to make certain that the other party performs its contractual undertakings by including provisions which, in reality, constitute a penalty for failure to perform. In contrast to a liquidated damages clause the purpose of penalty provisions in a penalty clause is to serve as a 10.__to breach in that it provides for damages which the parties know extend far beyond that which would normally compensate the non-breaching party for its loss. In many jurisdictions, the courts will sever the penalty clause from the contract, holding it to be unenforceable as

apenalty.

3.…

Historically, an enforceable liquidated damages clause will include the following elements:

a)the anticipated damages from the relevant breach are uncertain in amount or difficult to prove;

b)an intent by the parties to determine the damages in advance; and

c)a stipulated amount which is reasonable, not considerably disproportionate to the presumed loss or injury.

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The recent tendency of the courts is to give less or no weight to the subjective intent of the parties. Instead, the courts take into consideration all three elements, together with other factual circumstances, such as the relative bargaining power of the parties, to determine the reasonableness of the clause at issue.

The primary issue for the 11.__to decide is that of reasonableness of the prescribed amount of damages in proportion to the presumed loss for the 12.__party. As such, the court must assess whether the fixed amount is a realistic attempt to calculate the 13.__ damages which may result from the breach, or whether the amount represents a penalty the non-breaching party is attempting to 14.__ on the breaching party.

4. …

The courts generally look to the time of contract in determining the reasonableness of the damages set forth in it. Consequently, the actual loss incurred is immaterial, provided the damages as the time of contract represent a reasonable prediction. Of course, the breaching party has a very difficult argument to make regarding unreasonableness where the predicted amount is close to the actual loss.

Exercise 4. Read the article again and match the headings (a–d) with the sections they belong to (1–4).

a)Liquidated damages provisions distinguished from penalty clauses.

b)Relationship between the stipulated amount and the damages sustained.

c)Components of a liquidated-damages clause.

d)Definition of liquidated damages.

Exercise 5. Study the conversation between a lawyer (Mr. Dawe) and his client (Mr. Jameson, Director of Export Threads). Answer the questions.

1.What is the name of the buyer in this dispute?

2.Why does Export Threads want to terminate the contract?

3.Does a breach of contract automatically allow one party to terminate the agreement?

4.Does a lawyer think that Export Threads has a strong case?

5.What legal grounds might Export Threads have for terminating the contract?

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Mr. Dawe: Thanks again for coming by. Before we go on, could you briefly take me through the current dispute?

Mr. Jameson: Of course. Right. As you know, Export Threads exports materials for the production of clothing.

Mr. Dawe: Yes.

Mr. Jameson: Drexler incorporated agreed to purchase a large quantity of goods under the conditions stated in the contract. We relied on Drexler to notify us of the date of shipment two weeks in advance so that we could arrange a port for the loading of goods. We couldn’t do this because they failed to let us know by the agreed date. Now we would like to terminate the contract.

Mr. Dawe: Well, I can understand why you want to terminate the contract. However, the fact that Drexler appear to be in breach does not necessarily mean that you can terminate the contract. They may sue you.

Mr. Jameson: This is what I wanted to check, but I really don’t see how they could sue us. Surely, if they’re in breach of our contract, we should be able to end our business relationship?

Mr. Dawe: No, not necessarily. The important point is whether or not the term breached is a condition or a warranty.

Mr. Jameson: A warranty? As in a guarantee? I’m sorry. I don’t follow you.

Mr. Dawe: It’s like this. A warranty in this sense is a non-essential term. If there is a breach of warranty, a non-breaching party can sue for damages. However, a breach of warranty does not give the right to termination. A condition, on the other hand, is an essential term – in other words, it’s a very important term. When such terms are breached, the non-breaching party may terminate the contract.

Mr. Jameson: Ok, so we can end the contract if the term is a condition?

Mr. Dawe: That’s right. If we can show that the term breached is a condition, you’ll be able to terminate the contract. And you’ll also be able to claim damages for losses incurred.

Mr. Jameson: Right. And do you think we’ll be able to show it’s a condition?

Mr. Dawe: Yes, I’m quite certain we will. The term in question isn’t expressly stated as being a condition. That would have made things easier. However, just because it isn’t stated as being a condition, doesn’t necessarily mean it isn’t.

Mr. Jameson: Um… what exactly are you saying? You’re sure that the term is a condition?

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Mr. Dawe: Yes. I’ll try to be a little clearer. This contract involves a chain of sale, in such cases the need for certainty is very important. You relied on Drexler to notify you of the date of shipment two weeks in advance so that you could arrange a port for delivery. You also had to make sure that everything was in place for the loading of the cargo. You couldn’t arrange this as a direct consequence of the late notice. In cases like this, the court will find the term to be a condition.

Mr. Jameson: So we can terminate the contract? That’s good news. Ok, so what should we do now? Drexler are saying that we are unreasonably refusing delivery, but I guess if we make our side clear, then they couldn’t take any action against us? It’s probably best if I speak to my partners and see what they …

Exercise 6. Use the information from the task to write a short report of the case. What is the dispute over? How will they resolve the case?

TEXT Ñ. Types of Contracts

Read and translate the text. Make up the summary of the text in writing.

The two primary categories of contracts are unilateral and bilateral. In a unilateral contract, only one party makes a promise. The concept of unilateral contracts is important because it has been used by courts to hold a party liable for a promise even when consideration was not given by the other party. For instance, an employer may be liable for providing pension benefits that he promised to an employee, even if the worker gave no promise and did nothing in return. A bilateral contract is an agreement in which each of the parties to the contract makes a promise or set of promises to the other party or parties. Hence there are duties on both sides, rights on both sides, and consideration on both sides. If an offeror makes an offer such as “If you promise to paint my house, I will give you $100”, this is a bilateral contract once the offeree accepts. Each side has promised to do something, and each side will get something in return for what they have done.

Contracts may also be classified as “express” or “implied”. Express contracts are those in which both parties have explicitly stated the terms of their bargain, either orally or in writing, at the time that the contract was created. In contrast, implied contracts result from surrounding facts and circumstances that suggest an agreement.

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In addition to express and implied contracts are “quasi-contracts”, which arise from unique circumstances. Quasi-contracts are obligations imposed by law to avoid injustice.

Sometimes a contract may be defective and may consequently be void or voidable or unenforceable. A contract may be void – that is, no contract exists – if one, or both, of the parties is not recognised in law as having legal capacity to consent to a contract, for example minors – young people under 18 – or persons certified mental incapacity. So, void contracts fail to meet basic criteria, and are therefore not contracts at all.

A contract is voidable, that is it may be avoided, or cancelled, by one of the parties if there is some defect in its formation. For example, if the contract for the sale of land is not in writing, the parties can either ignore the defect and treat the contract as fully binding, or one of the parties can use the defect as a means for setting the contract aside. Thereby voidable contracts occur when one or both parties have a legal right to cancel their obligations.

Some contracts may be neither void nor voidable but cannot be enforced in a court of law, for example payment of a gambling debt. Such contracts are called unenforceable. If unenforceable, the contract may be rescinded, or depending on the nature of the problem, the contract may be reformed, thereby eliminating the obstacle precluding its enforcement. Rescission is a revocation, or termination of the contract. Unlike the revocation of an offer that has not been accepted and no contract formed, rescission is the revocation of an existing contract. Reformation is the revision of a writing to confirm to the real agreement or intention of the parties.

A separate type of contract, and one which overtly exemplifies the trend away from strict interpretation and toward fairness, is created by promissory estoppel. Under the theory of promissory estoppel, a party can rely on a promise made by another party despite the nonexistence of a formal, or even implied, contract. Promissory estoppel can be evoked if allowing a promisor to claim freedom from liability because of a lack of consideration (or some other contractual element) would result in injustice.

Points for discussion

1.Written contract.

2.Oral contracts are not always valid.

3.Remedies for the breach of contract.

4.Elements of a contract.

5.Types of contract.

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