Contract formation

Exercise 3. Read the text and translate it into Ukrainian.

All commercial activities in foreign trade may be divided into basic ones associated with the conclusion of foreign trade contracts for the exchange of goods and auxiliary ones ensuring their successful performance, i.e. associated with carriage of goods, their insurance, banking operations, as well as Customs and other activities.

Contracts are the foundation on which business is conducted. Properly drafted contracts can help you avoid unnecessary and costly disputes. A contract exists when two or more parties agree to exchange either property (including money) or promises of future performance. Contracts can be verbal or in writing.

In foreign trade transactions a contract is drawn up to give legal expression to the intention of the partners and guarantee that the obligation under the contract will be fulfilled. The contract forms the basis of transaction between the Buyers and the Sellers and great care is exercised when the contract is being prepared that all the legal obligations have been stated.

According to the purpose and contents contracts can cover: goods, services, technology, know-how, etc. By law contracts are made in written and signed by the contracting parties.

Exercise 4. Read the above text and find the equivalents of the following expressions and word-combinations.

Торговая/коммерческая деятельность; составить договор (3); споры; сторона; обязательство; обязательства по контракту; исполнить обязательства по контракту; установить обязательства; договаривающаяся сторона.

Exercise 5. Read quickly through the text below. Then match these questions (a – e) with the paragraphs that answer them (1 – 5).

a) What form can an enforceable contract take?

b) When do third parties possess enforceable rights in a contract?

c) Upon which grounds related to the formation of a contract may its validity be attacked?

d) What are the elements of an enforceable contract?

e) What are the essential terms of a contract?

Text 2

Under the common law, a promise becomes an enforceable contract when there is an offer by one party (offeror) that is accepted by the other party (offeree) with the exchange of legally sufficient consideration (a gift or donation does not generally count as consideration); hence the equation learned by law students: offer + acceptance + consideration = contract. The law regards a counter offer as a rejection of the offer. Therefore, a counter offer does not serve to form a contract unless, of course, the counter offer is accepted by the original offeror.

For a promise to become an enforceable contract, the parties must also agree on the essential terms of the contract, such as price and subject matter. Nevertheless, courts will enforce a vague or indefinite contract under certain circumstances, such as when the conduct of the parties as opposed to the written instrument, manifests sufficient certainty as to the terms of the agreement.

An enforceable agreement may be manifested in either written or oral words (an express contract) or by conduct or some combination of conduct and words (an implied contract). There are exceptions to this general rule. For example, the Statute of Frauds requires that all contracts involving the sale of real property be in writing.

In a contractual dispute, certain defences to the formation of a contract may permit a party to escape his/her obligations under the contract. For example, illegality of the subject matter, fraud in the inducement, duress and the lack of legal capacity to contract all enable a party to attack the validity of a contract.

In some cases, individuals/companies who are not a party to a particular contract may nevertheless have enforceable rights under the contract. For example, contracts made for the benefit of a third party (third-party beneficiary contracts) may be enforceable by the third party. An original party to a contract may also subsequently transfer his rights/duties under the contract to a third party by way of an assignment of rights or delegation of duties. This third party is called the assignee in an assignment of rights and the delegate in a delegation of duties.

Exercise 6. Read the above text and find the equivalents of the following expressions and word-combinations.

Адресат оферты/лицо, которому делается предложение;встречное предложение;договор в пользу третьего лица;закон об обманных действиях/Статут о мошенничестве;контракт, имеющий исковую силу;недееспособность;незаконный характер предмета договора;обстоятельство, освобождающее от ответственности;общее право; оспаривать действительностьконтракта;отклонение предложения;оферент/лицо, делающее предложение;оформление/заключение договора;ошибка в поощрении/стимулировании;первоначальная предлагающая сторона;первоначальная сторона; певоначальное предложение; передача/переуступка прав; письменный документ; подразумеваемый договор; (положительно) выраженный договор; право, защищённое иском; правопреемник; предложение; представитель; принудительное выполнение контракта; принуждение; спор по контракту; существенные условия договора; юридически достаточное встречное удовлетворение.

Exercise 7. Match the terms (1 – 25) from the above text with their definitions (a – y).

1) Assignee 14) Implied contract

2) Assignment of rights 15) Instrument

3) Consideration 16) Lack of legal capacity

4) Counter offer 17) Offer

5) Delegate 18) Offeree

6) Delegation of duties 19) Offeror

7) Duress 20) Party

8) Enforceable 21) Real property

9) Essential terms 22) Rejection

10) Express contract 23) Statute of Frauds

11) Formation 24) Subject matter

12) Fraud in the inducement 25) Third-party beneficiary contract

13) Illegality of the subject matter

1. capable of being made effective. In the case of an agreement, it is one in which one party can legally compel the performance of the other party.

2. indication of willingness to enter into a contract on specified terms, whereby, if accepted by the other person, a binding contract would result

3. party to whom an offer is made

4. party that displays a willingness to enter into a contract on specified terms

5. person or entity involved in an agreement

6. something of value given by one party to another in order to induce the other to contract. In common law, consideration is a necessary element for an enforceable contract.

7. offer with new terms made as a reply to an offer received

8. refusal to accept an offer

9. provisions required for a contract to exist

10. thing under consideration in a contract

11. written formal legal document

12. contract whose terms have been specifically outlined, either m writing or orally

13. contract whose terms have not been specifically outlined, but rather are presumed

14. piece of legislation which declares that certain kinds of contracts, for example those regarding land, marriage and the sale of goods worth over a certain amount of money, will be invalid unless put into writing and signed by both parties. The original statute was enacted in England in 1677 and serves as a basis for the US statutes.

15. land, including anything attached to it

16. act of bringing a contract into existence

17. when the matter under consideration in the contract is unlawful and therefore unenforceable in a court of law

18. act of misrepresenting or misleading someone so as to entice them to enter into a contract or agreement

19. unlawful threat or coercion used to force someone to enter into a contract

20. absence of ability of a person enter into contractual relations, sue or be sued

21. contract that provides for rights and duties to be conferred on a person who is not party to the contract

22. transfer of rights to another person such that the person to whom the rights have been transferred receives full benefits under the contract

23. transfer of responsibilities to be performed under a contract to another

24. person who receives an assignment

25. (UK) third party in a delegation to whom the duties have been transferred (US delegatee)

Exercise 8. Key terms: Defences to contract formation. Match these defences (1 – 4) with their definitions (a – d).

1) illegality of the subject matter

2) fraud in the inducement

3) duress

4) lack of legal capacity

a) when one party does not have the ability to enter into a legal contract, i.e. is not of legal age, is insane or is a convict or enemy alien

b) when one party induces another into entering into a contract by use or threat of force, violence, economic pressure or other similar means

c) when either the subject matter (e.g. the sale of illegal drugs) or the consideration of a contract is illegal

d) when one party is intentionally misled about the terms, quality or other aspect of the contractual relationship that leads the party to enter into the transaction

Exercise 9. The text below appears on the website of an American company whose stated mission is ‘to make legal information more accessible’. The text deals with electronic contracts, or ‘e-contracts. What do you know about e-contracts? Are they used often in your jurisdiction? Read through the text quickly and complete the spaces (1 – 5) using these sentences (a – e).

a) Consumer advocates are concerned because the federal electronic signature law does not define an electronic signature or stipulate what technologies can or should be used to create an electronic signature.

b) An electronic contract is an agreement created and “signed” in electronic form.

c) The law also benefits business-to-business websites who need enforceable agreements for ordering supplies and services. For all of these companies, the new law is essential legislation because it helps them conduct business entirely on the Internet.

d) Security experts currently favour the cryptographic signature method known as Public Key Infrastructure (PKI) as the most secure and reliable method of signing contracts online.

e) The notice must also indicate whether your consent applies only to the particular transaction at hand, or whether the business has to get consent to use e-documents/signatures for each transaction.