To look at a recent law report on a contract dispute concerning offer and acceptance, see: Pickfords Ltd v Celestica Ltd [2003] EWCA Civ 1741 at: www.bailii.org/databases.html

Professional English in Use Lon

Forming a contract 2

Form of 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:

■I 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 arc 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 ro 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 - it one party is a limited company. Common law requires that a deed is delivered. This determines the date from which the parties are bound. Ir must be clear on the face of a deed that it is executed by the parties as a deed. Deeds may contain standard wording about execution, for example:

This document is executed as a deed and is delivered and has effect at the date written at the beginning of it.

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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 legal 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. For example, if the contract for the sale of land is not in writing, the parries 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.

Some contracts may be neither void nor voidable bur cannot be enforced in a court of law, for example payment of a gambling debt. Lapse of time may render a contract unenforceable. The limitation period for a legal action brought under a deed is usually 12 years from the date of occurrence of the cause of action. An action on a simple contract is barred from being raised after six years.

Professional English in Use. Law

32.1 Replace the underlined words and phrases in a solicitor's conversation with his client with alternative words and phrases from A opposite. Pay attention to the grammatical context. There is more rhan one possibility tor two of the answers.

Client: Solicitor

Client:

Solicitor: Does she have the (1) power to act as his agent in this agreement? Yes, she's acting on his behalf. You understand that you can't rely on an oral agreement. The contract needs to be (2) oil paper. When do you want the contract to (3) come into operation? They want the deed (4) si gned, sealed and delivered by 3 1 July. We've had some problems in the past with suppliers letting us clown. 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.

32.2 Complete the sentences with words from the box. Look at A and Б opposite to help you.

barred delivered

brought executed

performed rendered

required treated

bound consented

enforced recognised
implied set aside

\ The contract was............................... unenforceable after 12 years.

2 The contract was technically voidable but the parties.............................. it as binding.

3 Because of the limitation period, you are............................. from bringing an action.

4 The other party has............................. to the terms of the contract.

5 The contract was.......................................................... by the court because it was defective.

6 Although there was no written agreement, the court decided the conduct of the parties a contract.

7 Registration of the transfer of land is.............................. by the law.

32.3 Complete the definitions. Look at В opposite to help you.

1 - time when an actionable event happened

2 - amount of time which is available for someone to

start legal proceedings

3................................................................................ - the passing of a period of years

What agreements must be made in writing in a jurisdiction you are familiar with? What sort of problems can arise? How are they dealt with?

To look at recent law reports on failure to execute a formal contract, see Bryen a Langley Ltd v Boston [2005] EWCA Civ 973 and Harvey Shopfitters Ltd v ADI Ltd [2003] EWCA Civ 1757 at: www.bailii.org/databases.html

Professional English m Use Law

Structure of a commercial contract

Structure of a commercial contract

Most written contracts have a similar structure consisting of certain essenrial clauses, irrespective of the subject matter of the contract. The general pattern of paragraphs can be:

Heading

For example, 'Distribution Agreement'.

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