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Contracts: characteristics and exercises


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Characteristics of one of the main legal text: contract and exercises to practice it

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Contracts: characteristics and exercises

  1. 1. INGLÉS JURÍDICO III. MAIN TYPES OF LEGAL TEXTS: STRUCTURE AND VOCABULARY 3.1. Contracts Under the common law, a promise becomes an enforceable contract (contrato en firme) when there is an offer by one party, normally called an offeror that is accepted by the other party (offeree) with the exchange of legally sufficient consideration (prestación). 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 (dar validez) an indefinite contract under certain circumstances such as when the conduct of the parties, as opposed to the written instrument (escritura), manifests enough 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 and words (an implied contract). In a contractual dispute, certain defences (eximentes) to the formation of the contract may allow a party to escape his / her obligations under the contract. For example; illegality of the subject matter which can be defined as follows: when either subject matter or the consideration of a contract is illegal. You can also allege fraud in the inducement, that is to say, when one party is intentionally misled (engañada) about the terms of a contract. Duress (coacción) is another defence you can use to discharge the specific performance of a contract. The last defence to be applied is the lack of legal capacity, meaning that you don’t have the ability to enter into a legal contract because you are not of legal age or you are insane. Master “Práctica Legal y Empresas” UCLM 2008 26
  2. 2. INGLÉS JURÍDICO The common clause types which appear in no matter what kind of contract are the following: a) Acceleration (adelanto) requires the offeree to pay all or part of a payable amount sooner than as agreed upon the occurrence of some event b) Assignment (cesión): prohibits or permits assignment under certain conditions c) Confidentiality (cláusula de confidencialidad): implies treating the information as private d) Force majeure (fuerza mayor): tries to protect against failures to perform contractual obligations caused by unavoidable events beyond party’s control e) Consideration (prestación): expresses the cause, motive, price which induces one party to enter into an agreement f) Liquidated damages (indeminización por daños y perjuicios exigible): refers to an amount previously established by the parties as the total amount of compensation if there is a breach of contract g) Entire agreement (cláusula de mutuo acuerdo): says that the written terms of an agreement can’t be varied by prior or oral agreements h) Severability (cláusula de divisibilidad): provides that in the event that one or more provisions of the agreement are declared unenforceable, the balance of the agreement remains in force i) Termination (cláusula de rescission): establishes when and under which circumstances the contract may be terminated j) Payment of costs (pago de las costas): sets out which party is responsible for payment of costs related to the preparation of the agreement and ancillary documents (documentos secundarios) When there has been a breach of contract, the non-breaching party will often seek remedies available by law. Most remedies involve money damages. In some cases, a party will be able to obtain punitive or exemplary damages through the court which are designed to punish the Master “Práctica Legal y Empresas” UCLM 2008 27
  3. 3. INGLÉS JURÍDICO breaching party for a conduct which is judged to be particularly reprehensible such as 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 wouldn’t be an adequate remedy, the court may order specific performance (cumplimiento del contrato) which involves an order by the court compelling the breaching party to perform the contract. Finally, there are other remedies available: for example, if there has been a default (incumplimiento) by one party, the other party may rescind or cancel the contract Main types of contract Most of the civil cases are probably related to torts, among them we can include nuisance (molestias) and trespass (intromission o violación de la propiedad) and breach of contract (incumplimiento de contrato). Nowadays most of the economic relationships among parties are secured by contracts. Among the most important types of contract, we can find: a) Purchase sale contract (contrato de compra-venta): This contract can be oral or written but some of them such as the purchase-sale of real property (compraventa de bienes immuebles) must be legalised by a deed (escritura pública). These contracts are terminated, among other reasons, by the following: - the contract has been performed - by agreement of the parties - by novation (novación): one of the parties can ask for the contract to be modified in order for the dispute to be settled. The affecting party accepts to release the another party from his contractual obligations signing another contract with a new consideration called satisfaction (satisfacción), settlement (liquidación) or discharge (finiquito) - by breach of contract b) Lease or leasehold (contrato de arrendamiento): the owner of a real property, called the lessor or landlord, grants the possession and exclusive use of this real property to a lessee or tenant for a fixed Master “Práctica Legal y Empresas” UCLM 2008 28
  4. 4. INGLÉS JURÍDICO period of time. This type of contract should also be legalised by a deed, in which covenants (estipulaciones o pactos) are included. Among the most important covenants included in this kind of contract, we can find the following: the parties to the contract, the term or length, the description of real state, rent (renta), insurance (seguros) and repairs / maintenance (reparación y mantenimiento). The tenancy can be for a fixed term or periodic. When the tenancy is for a fixed period of time, the lessee can assign to another person his contract for the remaining period of time whenever there is no covenant against it. The periodic tenancy usually lasts until the lessor or tenant gives notice (denunciar). When it’s the landlord who gives notice, it’s called eviction notice (notificación de desahucio). When there is no fixed period of time for the tenancy, it can be said that there is tenancy at will (inquilinato sin plazo fijo). In this tenancy, the terms of the contract are brought to an end when one of the parties thus determines. c) Contract of employment: the employees have right to health and safety at work, to paid holidays, to statutory sick pay (baja laboral por enfermedad) and to statutory maternity pay. When industrial disputes arise, they can be heard in Industrial tribunals (Magistratura de Trabajo). Most of these disputes are related to the termination (extinction) of contracts of employment. Among the reasons of termination, we can find the following: unfair dismissal (despido improcedente) or redundancy (expediente de regulación de empleo). Among the remedies applied by Industrial Tribunals when somebody is unfairly dismissed are the following: reinstatement (readmisión), reengagement (recolocación) and compensation (indeminización). The employer can also make breach of contract when an employee is demoted (rebajado en su categoría professional), cut in his wages (se reduce su salario) or he / she is sexually harassed (acosado sexualmente) Master “Práctica Legal y Empresas” UCLM 2008 29
  5. 5. INGLÉS JURÍDICO EXERCISES 1- 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 doesn’t 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 not entering into a contract by use or threat of force, violence, economic pressure or other similar means c. when either the subject matter or the consideration of a contract is illegal d. when one party is intentionally misled about the terms, quality or other aspects of the contractual relationship that leads the party to enter into the transaction 2- Identify the type of clause exemplified by each of these clauses: 1. The seller’s liability for damages shall in no case exceed the purchase price of the particular quantity delivered with respect of which damages are claimed 2. Whenever, within the sole judgment of Seller, the credit standing of Buyer shall become impaired. Seller shall have the right to demand that the remaining portion of the contract be fully performed within 10 days 3. Neither party shall be liable in damages or have the right to terminate this Agreement for any delay or default in performing hereunder if such delay or default is caused by conditions beyond its control Master “Práctica Legal y Empresas” UCLM 2008 30
  6. 6. INGLÉS JURÍDICO 4. This Agreement may not be assigned without the prior written consent of the other party, except that the Buyer may assign the Agreement to a subsidiary or related corporation 5. In the event Operator defaults in the performance of any covenant or agreement made hereunder, as to payments of amounts due hereunder or otherwise, and such defaults are nor remedied to the Supplier’s satisfaction within 10 days after notice of such defaults, the Supplier may thereupon terminate this agreement 6. This Agreement, including the Schedules and Exhibits attached hereto, constitutes and contains the entire agreement of the parties with respect of the subject matter hereof and collectively supersedes any and all prior negotiations, correspondence, understandings and agreements between the parties respecting the subject matter hereof. No party is relying on or shall be deemed to have made any representations or promises not expressly set forth or referred to in this Agreement 3- In your own words, explain the following words and expressions in italics from the clauses in exercise 2 a) liability for damages (clause 1) b) within the sole judgment of Seller (clause 2) c) delay or default (clause 3) d) prior written consent (clause 4) e) In the event Operator defaults in the performance ….. (clause 5) f) Schedules and Exhibits (clause 6) g) Deemed (clause 6) Master “Práctica Legal y Empresas” UCLM 2008 31
  7. 7. INGLÉS JURÍDICO 4- Read the following clause and for each of these words, find the word or expression in the clause that most closely matches the meaning 1. in the form of 2. specified in writing 3. more than 4. jointly 5. is owed to 6. including 7. as stated above 8. subtracted form FAILURE TO FINISH THE WORK ON TIME It is mutually agreed by and between the parties hereto that time is of the essence and that in the event of the Contractor’s failure to complete the contract within the time stipulated and agreed upon, the Owner will be damaged thereby; and because it is difficult to definitely ascertain and prove the amount of such damages, inclusive of expenses for inspection, necessary travelling expenses and other similar expenses, it is hereby agreed that the amount of such damages shall be the liquidated sum of Two thousand Dollars per calendar day for each day of delay in finishing the Work in excess of the number of working days prescribed; and the Contractor hereby agrees that such sum shall be deducted from amounts due to the contractor under the contract or, if no amount is due the Contractor, the Contractor hereby agrees to pay to the Owner as liquidated damages, and not by way of penalty, such total sum as shall be due for such delay, calculated as aforesaid. Master “Práctica Legal y Empresas” UCLM 2008 32
  8. 8. INGLÉS JURÍDICO LISTENING ACTIVITIES: 5- You will hear Arthur Johansson, a junior lawyer who attended the in-company seminar on negotiating techniques, negotiating the terms of an agreement for a client with the other party’s lawyer, Ms. Orwatz. a) What kind of agreement are they talking about? Which clauses do they mention? b) Decide whether these statements are true or false: 1. the clause they are discussing wouldn’t allow the franchises to operate any kind of restaurant within the prescribed area for a stipulated period of time 2. the lawyer representing the franchisor argues that the purpose of the clause is to guard her client’s legitimate business interests 3. the franchisee’s lawyer believes that his client is in a strong position in the negotiation 4. the franchisee’s lawyer offers to strike the arbitration clause in exchange for a reduction in the number of years set forth in the non-competition clause 6- Listen to an attorney informing a client about the various remedies available to him 1. What was wrong with the software program delivered to the client? a) it was completed too late to meet the deadline b) it didn’t work on all the ferry company’s PC’s c) it wasn’t designed in accordance with the specifications of the clients 2. According to the lawyer, what should her client have done to mitigate his damages? a) he should have offered his customer less than a 10% discount b) he should have looked for a cheaper local programmer Master “Práctica Legal y Empresas” UCLM 2008 33
  9. 9. INGLÉS JURÍDICO c) he should have had an attorney draw up the contract 3. Provided the contract doesn’t waive the right to consequential damages, under which circumstances might the client be entitled to receive such damages? a) if the reputation of the client in his town suffers b) if the quality of the software turns out to be unsuitable for the purposes of the customer c) if the loss of the customer and the necessity to grant a discount could have been foreseen 4. Why can’t the client expect to be awarded punitive damages? a) weight gain doesn’t qualify as emotional injury b) punitive damages aren’t awarded in a breach of contract case of this type c) the possibility of personal injury was not foreseen in the contract 7- You will hear Ron, the lawyer preparing the case, talking with Sam, a senior partner, about the facts of the case. Tick the facts of the case Ron mentions 1. The Jones corporation (the lessor) wanted to sell a restaurant to Keats (the lessee) 2. Keats requires consent from the Jones Corporation to assign the lease to a third party 3. Prior written consent to assignment is not necessary 4. The Jones Corporation is not permitted to withhold consent unreasonably 5. Keats couldn’t provide the information about the buyer that Jones requested 6. the prospective buyer withdrew his offer for the restaurant 7. the buyer is suing Keats for breach of contract Master “Práctica Legal y Empresas” UCLM 2008 34