Contracts

Legal English
 • When might individuals, businesses and
governments enter into a contract?
• Why do we need them? Why can’t we
just trust each other? Isn’t anybody
decent anymore?
Discussio • In what situations do contracts make
sense? Do we need more or fewer
n contracts?
• What makes a good contract? What
needs including? Should it be long or
short? Simple or complicated?
• What would your recommendations be
for drafting contracts?
 It can be said that the essential ingredients of
any agreement to constitute a contract are
the following:

Parts of - an offer,
- which is accepted,
a - both parties intending to enter legal
relations,

contract - both parties having capacity to contract

- there being no mistake, misrepresentation
or under influence
- the object being lawful.
1. Consideration
2. Offer
3. Acceptance
4. Intention
5. Capacity
1. Consideration
It is a term used for the price. It need not be money; it may be an
exchange of goods, but a basic principle is that an agreement must
amount to a bargain, each of the parties paying a price for what he
receives from the other.

The inducement to a contract. The cause, motive, price or impelling influence which
induces a contracting party to enter into a contract. The reason or material cause of a
contract. Some right, interest, profit of benefit accruing to one party, or some
forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other.
(Blacks Law Dictionary)
Here are three hypothetical situations which will illustrate the idea of consideration. Decide
with a partner whether or not consideration is present in each case.

1. When Mr Smith learns that his nephew is thinking of dropping out of

university, he promises to give him a car and completes his university
studies and obtains his degree.
2. As a graduation present, Mary Brooks promises to take her
granddaughter on a trip to China. When she graduates, can Mary’s
granddaughter legally hold her grandmother to this promise?
3. X and Y enter into a contract whereby X promises Y that he will sail
around the world in a canoe departing from Manila and visiting all the
islands that he comes across during a period of 365 days. X also
undertakes that he will finish palpable evidence of the islands visited .
The following rules govern consideration:

1. Consideration must be sufficient, but no need to

be adequate.
2. Consideration need not move to the promisor.
3. Consideration must move from the promisee.
4. Past consideration is no consideration.
5. Consideration must not be illegal.
6. Consideration must be real.
7. Consideration must be possible of performance.
In the following case the court decided that there was no
consideration. Read the case and decide which of the rules
governing consideration were broken.

Mr Harrison, the second defendant, was the secretary of the defendant

Company, which was a charity. He fraudulently represented to the plaintiff
that he was in a position to nominate persons to be given titles. He told the
plaintiff that he or the charity could arrange for him to be given a
knighthood if the plaintiff would make an adequate donation to the charity.
The plaintiff paid€3,000 to the charity but did not receive a knighthood in
return for this dination. The plaintiff brought an action to recover the
€3,000.
Complete the sentences with the correct preposition:

1. A contract for the sale of land must be __________ writing.

2. Many court cases arise _________ contracts that are poorly
drawn up.
3. This contract has been made ________seal.
4. When you enter _________ a contract you are bound
________the terms of that contract.
5. We have been ordered to refrain________using that symbol
in our advertising campaign.
2. Offer
In order for a contract to be binding, there must be a valid offer and
acceptance.
What constitutes a valid offer? There are 4 basic requirements:
1. The offer must be communicated from the offeror to the offeree.
2. The offer must contain language of commitment.
3. The offer must be made with serious intention by the offeror.
4. The offer must be reasonably definite, usually containing the
names of the parties involved, the subject-matter, the
consideration(price) and the time and place of performance.
 In well-written sentences, explain the
difference between the following concepts:

1. unilateral contract / bilateral contract

Writing 2. valid offer / invitation to treat

3. detrimental / legal detriment

3. Acceptance
1.Acceptance is a voluntary act by the offeree who shows ________to
the terms specified by the offeror.
2. It can be manifested by the ___________of an act or by a ________
__________ .
3. Normally acceptance must be ___________to the offeror.
4. Sometimes the offeror may ________the necessity of
communication of acceptance.

performance waive communicated assent return promise

4. Intention
Intention to enter legal relations is a vital element of an enforceable
contract.

Briefly explain the difference between commercial and family

agreements. The following words may be useful:

give rise to presume/presumption

implied

Expressed rebut / rebuttal intend/intention

5. Capacity

Persons may be natural or artificial. Natural persons are, of course, human

beings. Artificial persons are corporations.
In the case of natural persons, the general rule is that all natural persons have
full contractual capacity. In the case of corporations, their contractual capacity
depends upon how the corporation was treated.

Finish these sentences in an appropriate way

1. On his/her 18th birthday, a minor …
2. Regarding contractual capacity, a mentally unsound person is incapable of …
3. We have submitted a tender …
Forming a contract
A binding contract must be:
in the form required by the law;
Between parties with the capacity to contract – that is legally capable to contract –
or made by agents or representatives of the contracting parties with the authority
to act.
It should be:
enforceable in the event that one of the contracting parties fails to perform the
contract.
It may be:
made in writing;
made orally;
implied from conduct, that is,by the behaviour of the contracting parties.
However, the law does require that some agreements are made in writing.
This is usually because registration is required for the agreement to be
effective and the relevant registry requires a written agreement.
Examples of agreements to be made in writing include:

contracts for the sale of land;

contracts of guarantee
contracts for transfer of shares
contracts which must be made by deed, for example, a lease for more
than three years
A simple contract requires consideration – the price in exchange for a
promise to do something – and becomes effective on execution, generally
when it is signed. In contrast, a contract by deed does not require
consideration. A deed has different formal execution requirements
depending on the contracting parties.
For example, a deed may need to be affixed with a seal – a printed
company stamp – if one party is a limited party.
Common law requires that a deed is delivered. This determines the date
from the parties are bound. It must be clear on the face of the deed that it
is executed by the parties as a deed. Deeds may contain standard
wording about execution, for example:
The document is executed as a deed and is delivered and has effect at the
date written at the beginning of it.
Void or voidable or unenforceable contracts

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 capacity to consent to a contract,
for example minors –young people under 18- or persons with certified
mental incapacity
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.
Some contracts may be neither void nor voidable but cannot be enforced
in a court of law, for example payment of a gambling debt. Lapse of time
may render a contract unenforceable.
Replace the underlined words and phrases in a solicitor’s conversation with
his client with alternative words and phrases from the previous slides.

Solicitor: Does she have the (1) power to act as his agent in this agreement?
Client: Yes, she’s acting on his behalf.
Solicitor: You understand that you can’t rely on an oral agreement. The
contract needs to be (2) on paper. When do you want the contract
to (3) come into operation?
Client: They want the deed (4) signed, sealed and delivered by 31 July.
We’ve had some problems in the past with suppliers letting us
down. Can you make sure this contract will be (5) binding?
Solicitor: We’ll use a (6) recognised set of words stating that the provisions
are legally binding in the agreement we draw up for you.
The following statements were made by laymen. Rewrite
them so as to sound like a lawyer in a professional setting

1. Mr Brown hasn’t promised anything. He has only shown that he wants

to make a contract someday.

2. Unless you say you are not interested in continuing with this contract
before you turn 18, you will be responsible for everything in it.

3. The man that took me to court won the case.

4. He performed the contract in the established way.

Rewrite the following sentences in a more formal style,
using the word given in brackets after the original sentence.

1. In a bilateral contract you say you’re going to accept and then you do
what you’ve promised. That makes it different from a unilateral
contract. (distinguishes)
2. The way he acted made me think he was accepting my offer. (inferred)
3. You’ve got to do what the contract says because you’ve signed it.
(committed)
Language of Contracts
1. …now it is hereby agreed…
2. …subject as hereinafter provided …
3. …you will find in the documents herewith attached …
4. … the failure of either party to exercise any right or remedy to which it
is entitled hereunder …
5. … as thereby stated …
6. … all statutory instruments or orders made pursuant thereto …
7. … the aforementioned terms shall prevail over …
a. by means of this document or declaration
b. with this document
c. by the terms of the agreement
d. previously stated
e. later in this document
f. in that matter
g. to the thing just mentioned
Task 1
Mrs. Turner has decided to start her own business running a private day
nursery. It is necessary for her to find appropriate premises. She sees a
detached house, which would be appropriate, on the market for £200,000.
After having viewed the property she decides to make a bid for the property
for £150,000. The sellers state clearly, however, that they will only accept
£180,000.
Mrs. Turner then sees another property on the market for £250,000. She offers
£50,000 below the asking price and her offer is accepted.
However, a week later the sellers of the first property contact Mrs. Turner
again stating that they have reconsidered and are now happy to accept her bid
for £150,000.

• Advise Mrs. Turner as to her position in the light of these developments.

Task 2
Mrs. Turner has now purchased a suitable property and is currently looking for
the necessary items required to run her nursery. She looks on a website and sees
cots and high chairs advertised for sale by a company named Babies R Us. She
sends an email to the company on 1 October 2015, requesting twenty cots and
twenty high chairs, and states that she requires a reply by 21 November 2015.
Not having received a reply by 30 November, Mrs. Turner enters into a contract
with a rival company. On 1 December a Babies R Us van arrives at her premises to
deliver the twenty cots and high chairs. Mrs. Turner refuses the merchandise and
sends the delivery van away.
On 10 December she receives a letter from Babies R Us’ lawyer, requesting full
payment for the merchandise ordered and claiming she has breached her
contract with the company.
• Advise Mrs. Turner of her legal position.