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Государственное Образовательное Учреждение

Высшего Профессионального Образования


«Московский Государственный Лингвистический Университет»

Ускова Т.В.

«Оформление договоров в английском праве»


(Часть 1)

Учебное пособие
(для студентов V курса Факультета Экономики и Права)

Москва 2007
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Предисловие
Данное пособие предназначено для студентов-юристов, изучающих
договорное право Англии и вопросы оформления договоров. Пособие
построено на аутентичном фактическом материале. Использование
современного материала позволяет обращаться к актуальным вопросам
составления договоров как в английском, так и в русском праве, что,
безусловно, повышает мотивацию учащихся.
Цель пособия – рассмотреть основные элементы договора в
английском праве, провести сравнительный анализ английского и
русского договорного права, активизировать языковые и речевые навыки
обучаемых, расширить и закрепить словарный запас в области
договорного права, а также научить студентов участвовать в
обсуждениях и дискуссиях.
Данное пособие состоит из трех разделов, каждый из которых
разделен на несколько частей, объединенных общей тематикой. В первом
разделе рассматриваются основные требования к договору, принцип
порочности договора, основные элементы договора; второй раздел
рассматривает оферту и акцепт, вопросы установления отношений
между оферентом и адресантом оферты; третий раздел посвящен
проблемам действительности договоров (ошибка, введение в
заблуждение, недолжное влияние), средствам судебной защиты и
ограничениям на вступление в договорные отношения. Каждый раздел
включает словарь, упражнения на закрепление активного словаря, а
также грамматические и лексические упражнения на профессионально-
ориентированном материале. Помимо основных разделов пособие
включает глоссарий юридических терминов на английском языке.
Пособие может быть использовано для обучения широкой
аудитории специалистов, изучающих английский язык в связи с
правовой специальностью.
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Содержание
1. Unit 1 ……………………………………………………………..4 – 46
2. Unit 2 ……………………………………………………………..46 – 77
3. Unit 3 …………………………………………………..………..77 – 122
4. Glossary ......……………………………………………………122 - 126

Unit 1. The Nature of a Contract in English Law


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Part 1.
Essential requirements
There are still misconceptions about this branch of law. For many people
the word 'contract' suggests a visit to a solicitor's office and the signing
of a formal document containing incomprehensible language. This is far
from the truth. Most people make contracts every day of their lives,
usually without realizing it. Every time they buy an article or pay for a
service such as a haircut they are entering into a contract, while matters
concerned with their work, such as holidays, wages and hours, are
governed in part by the contract which they have made with their
employer.
Another popular belief is that a contract must be in writing. Apart from a
few exceptional instances, this is not so. Most contracts are made by
word of mouth. It may be desirable to have a written agreement where a
lot is at stake, or where the contract has to last for a long time, but this is
only for practical purposes of proof, and is usually not legally necessary.
A contract is simply an agreement which the law will recognize. It is of
vital importance in business life, and forms the basis of most commercial
transactions, such as the sale of goods and land, the giving of credit,
insurance, carriage of goods, formation and sale of business
organizations, and, to some extent, employment.

What agreements will the law recognize?


The law will not recognize all agreements. The law of contract is
concerned mainly with providing a framework within which business
can operate; if agreements could be broken with impunity, the
unscrupulous could create havoc. English law will intervene, therefore,
and make the person who breaks an agreement pay compensation
(damages) to the other party, but only if the agreement has the following
essential features:
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1. Intention to create legal relations. Unless the courts are satisfied that
the parties intended the agreement to be legally binding, the courts will
take no notice of it.
2. Agreement. The courts must be satisfied that the parties had reached a
firm agreement, and that they were not still negotiating. Agreement will
usually be shown by the unconditional acceptance of an offer (Unit 2).
3. Consideration. English law will only recognize a bargain, not a mere
promise. A contract, therefore, must be a two-sided affair, each side
providing or promising to provide some consideration in exchange for
what the other is to provide. Consideration is a special feature of the
common law and is not required by most European legal systems,
including Scotland.
4. Form. Certain exceptional types of agreement are only valid if made
in a particular form, for example in writing.
5. Definite terms. It must be possible for the courts to ascertain what the
parties have agreed upon. If the terms are so vague as to be meaningless,
the law will not recognize the agreement (Unit 2).
6. Legality. Certain types of agreements are so plainly 'contrary to public
policy' that the law will have nothing to do with them. For example, the
courts would not allow a hired murderer to recover damages if his
principal refused to pay the agreed price.

Defective contracts
Discussion of these essential requirements must also include situations
where, although English law will recognize the agreement, the contract
will only be given limited effect or no effect at all.
Some defects will render a contract unenforceable, so that although the
contract does exist, neither party can sue the other successfully.
Examples include unregulated consumer credit agreements and
guarantees which do not comply with certain formalities. Goods or
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money which pass under an unenforceable contract are validly


transferred and cannot be reclaimed, but the contract cannot be sued
upon if one of the parties refuses to abide by its terms.
Other defects can render a contract voidable, where although English law
will recognize the agreement, it will allow one of the parties to withdraw
from it if he so wishes. Voidable contracts include most agreements
made by minors or by persons incapacitated by drunkenness or insanity,
and contracts induced by misrepresentation, duress or undue influence.
Finally, there are defects which can render a contract void, that is,
destitute of all legal effect. The expression 'void contract' is really a
contradiction in terms; if the contract is void it cannot be a contract. The
expression is useful, however, to describe a situation where the parties
have attempted to contract but the law will give no effect to their
agreement at all. Thus a contract may be void if there is a common
mistake on some fundamental issue, as where the parties agree to sell a
cargo which, unknown to both, has already been completely destroyed.
Agreements to sell land will not be recognized at all until the relevant
documents have been signed.
The distinction between void and voidable contracts is important where
the rights of third parties are concerned. If a contract of sale is void,
ownership of the property sold will not pass to the buyer, and he cannot
normally sell it to anyone else. The original seller will be able to recover
the property from whoever has it. If the contract is merely voidable, it
remains valid unless and until the innocent party chooses to terminate it;
therefore, if the buyer re-sells before the contract is avoided, the sub-
buyer becomes the owner, and can retain the property provided that he
took it in good faith.

Exercises on the text.


Task 1. Read the text and translate it into Russian.
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Task 2. Study the following legal terms and their definitions, supply
corresponding Russian terms, use them in situations of your own.
1. transaction. n. 1. The act or an instance of conducting business or other
dealings. 2. Something performed or carried out; a business agreement or
exchange. 3. Any activity involving two or more persons.
2. impunity. n. An exemption or protection from punishment. Compare:
immunity. n.1. Any exemption from a duty, liability, or service of
process; esp., such an exemption granted to a public official.
3. bind. v. To impose one or more legal duties on (a person or institution).
binding. adj. 1. (of an agreement) that binds <a binding contract>. 2. (of
an order) that requires obedience.
binder. n. A document in which the buyer and the seller of real
property declare their common intention to bring about a transfer of
ownership, usu. accompanied by the buyer’s initial payment.
4. agreement. n. 1. A mutual understanding between two or more persons
about their relative rights and duties regarding past or future
performances; a manifestation of mutual assent by two or more persons.
2. The parties’ actual bargain as found in their language or by implication
from other circumstances, including course of dealing or usage of trade
or course of performance.
formal agreement. An agreement in which the law requires not only the
consent of the parties but also a manifestation of the agreement in some
particular form, in default of which the agreement is null.
invalid agreement. See invalid contract.
simple agreement. An agreement in which the law requires nothing for
its effective operation beyond some manifestation that the parties
consented.
valid agreement. See valid contract.
voidable agreement. See voidable contract
void agreement. See void contract.
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5. contract. n. 1. An agreement between two or more parties creating


obligations that are enforceable or otherwise recognisable at law <a
binding contract>. 2. The writing that sets such an agreement. 3. Loosely,
an unenforceable agreement between two or more parties to do or not to
do a thing or set of things; a compact. 4. A promise or set of promises by
a party to a transaction, enforceable or otherwise recognisable at law; the
writing expressing that promise or set of promises. 5. Broadly, any legal
duty or set of duties not imposed by the law of tort; esp., a duty created
by a decree of declaration of a court <an obligation of record, as a
judgement, recognisance, or the like, is included within the term
“contract”>. 6. The body of law dealing with agreements and exchange
<the general theory of contract>. 7. The terms of an agreement, or any
particular term.
adhesion contract. A standard-form contract prepared by one party, to be
signed by the party in a weaker position, usu. a consumer, who has little
choice about the terms. – Also termed contract of adhesion; adhesory
contract; adhesionary contract; take-it-or-leave-it contract; leonine
contract.
contract under seal. A formal contract that requires no consideration and
has the seal of the signer attached.  Modern statutes have mostly
eliminated the special effects of a sealed contract. It must be in writing or
printed on paper or parchment and is conclusive between the parties
when signed, sealed, and delivered. Delivery is made either by actually
handing it to the other party (or party’s representative) or by stating an
intention that the deed be operative even though it is retained in the
possession of the party executing it. – Also termed sealed contract;
special contract; specialty contract; specialty; deed; covenant.
invalid contract. A contract that is either void or voidable. – Also termed
invalid agreement.
unenforceable contract. A valid contract that, because of some technical
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defect, cannot be enforced; a contract having some legal consequences,


but that may not be enforced in an action for damages or specific
performance in the face of certain defences, such as the statue of frauds.
 Unenforceable contracts share many features with voidable contracts,
but unlike the latter, in some instances they may be enforced indirectly. –
Also termed agreement of imperfect obligation.
valid contract. A contract that is fully operative in accordance with the
parties’ intent. – Also termed valid agreement.
voidable contract. A contract that can be affirmed or rejected at the
option of one of the parties; a contract that is void as to the wrongdoer
but not void as to the party wronged, unless that party elects to treat it as
void.
void contract. 1. A contract that is of no legal effect, so that there is
really no contract at all. 2. A contract that has been fully performed. –
Also termed discharged contract. 3. Loosely, a voidable contract.
6. consideration. n. Something of value (such as an act, a forbearance, or
a return promise) received by a promisor from a promisee. 
Consideration, or a substitute such as promissory estoppel, is necessary
for an agreement to be enforceable.
adequate consideration. Consideration that is fair and reasonable under
the circumstances of the agreement.
inadequate consideration. Consideration that does not involve an
exchange of equal values.
past consideration. An act done or a promise given by a promisee before
making a promise sought to be enforced.  Past consideration is not
consideration for the new promise because it has not been given in
exchange for this promise (although exceptions exist for new promises to
pay debts barred by limitations or debts discharged in bankruptcy.
sufficient consideration. Enough consideration – as a matter of law – to
support a contract. – Also termed due consideration; legally sufficient
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consideration.
valuable consideration. Consideration that is valid under the law;
consideration that either confers a pecuniarily measurable benefit on one
party or imposes a pecuniarily measurable detriment on the other. – Also
termed good and valuable consideration; legal consideration.
7. enforce. v. 1. To give force or effect to (a law, etc.); to compel obedience
to. 2. Loosely, to compel a person to pay damages for not complying
with (a contract).
enforcement. n. The act or process of compelling compliance with a
law, mandate, or command.
8. unenforceable, adj. (Of a contract) valid but incapable of being
enforced.
9. claim, n. 1. The aggregate of operative facts giving rise to a right
enforceable by a court. 2. The assertion of an existing right; any right to
payment or to an equitable remedy, even if contingent or provisional
<the spouse’s claim to half of the lottery winnings>. 3. A demand for
money or property to which one asserts a right <an insurance claim>.
10. abide, v. 1. To tolerate or withstand. 2. To obey <try to abide the
doctor’s order to quit smoking>. 3. To await <the death-row prisoners
abide execution>. 4. To perform or execute (an order or judgement) <the
trial court abided the appellate court’s order>. 5. To stay or dwell <the
right to abide in any of the 50 states>.
11. abide by, v. To act in accordance with or in conformity to.
12. void, adj. 1. Of no legal effect; null.  The distinction between void and
voidable is often of great practical importance. Whenever technical
accuracy is required, void can be properly applied only to those
provisions that are of no effect whatsoever – those that are an absolute
nullity. – void, avoid, v. – voidness, n.
13. voidable, adj. Valid until annulled; esp., )of a contract) capable of being
affirmed or rejected at the option of one of the parties.  This term
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describes a valid act that may be voided rather than an invalid act that
may be ratified. – voidability, n.
14. minor, n. A person who has not reached full legal age; a child or
juvenile. – Also termed infant.
15. destitute, adj. Not possessing the necessaries of life; lacking
possessions and resources; indigent.
16. effect, n. 1. That which is produced by an agent or cause; a result,
outcome, or consequence. 2. The result that an instrument between
parties will produce on their relative rights, or that a statute will produce
on existing law, as discovered from the language used, the forms
employed, or other materials for construing it.
17. duress, n. 1. The physical confinement of a person or the detention of a
contracting party’s property.  In the field of torts, duress is considered a
species of fraud in which compulsion takes the place of deceit in causing
injury. 2. The threat of confinement or detention, or other threat of harm,
used to compel a person to do something against his or her will or
judgement.  Duress is a recognised defence to a crime, contractual
breach, or tort.
18. undue influence. 1. The improper use of power or trust in a way that
deprives a person of free will and substitutes another’s objective. 
Consent to a contract, transaction, relationship, or conduct is voidable if
the consent is obtained through undue influence.
19. terminate, v. 1. To put an end to; to bring to an end. 2. To end; to
conclude.
20. good faith, n. A state of mind consisting in (1) honesty in belief or
purpose, (2) faithfulness to one’s duty or obligation, (3) observance of
reasonable commercial standards of fair dealing in a given trade or
business, or (4) absence of intent to defraud or to seek unconscionable
advantage. – Also termed bona fides.
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Task 3. Answer the following questions.


1. What are the essential requirements to a contract?
2. Why is it so difficult to define the notion of “contract”?
3. What types of contract can you name?
4. What agreements will the law recognize?
5. Give the definitions of “agreement”, “intentions to create legal
relations”, “consideration”, “form”, “definite terms”, “legality”.
6. Why is each of the elements so important?
7. Can a contract exist without one of these elements?
8. What contracts are called “defective”? Why?
9. What types of defective contracts do you know?
10. What makes a contract “void”/ “voidable”?
11. What is the difference between a void and a voidable contracts?

Task 4. Fill in the required legal term.


Contract (4) · impunity · bind · immunity · claims
· abide · consideration (3) · contracts of adhesion ·
transactions · form · contract under the seal · deed ·
voidable · specialty · agreement (2)· binding

1. A … is valid if valid under the law of residence of the party wishing to


enforce the … . 2. Because she was a foreign diplomat, she was able to
disregard the parking tickets with … . 3. The parties … by the contract.
4. The temporary injunction was … on the parties. 5. … is in some parts
a broader term than the contract, or even than bargain or promise. It
covers executed sales, gifts, and other trades of property. 6. An … is a
defence to tort liability which is conferred upon an entire group or class
of persons or entities under circumstances where considerations of public
policy are thought to require special protection for the person, activity, or
entity in question at the expense of those injured by its tortious act. 6.
Some sets of trade and professional forms are extremely one-sided,
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grossly favouring one interest group against others, and are commonly
referred to as … . From weakness in bargaining position, ignorance, or
indifference, unfavored parties are willing to enter … controlled by these
lopsided legal documents. 7. The only formal … of English law is the …,
sometimes also called a … and sometimes a …. It is the only formal …,
because it derives its validity neither from the fact of …, nor from the …
which may exist from the promise of either party, but from the … in
which it is expressed. 8. A … contract is a contract which, in its
inception, is valid and capable of producing the results of a valid
contract, but which may be ‘avoided’, i.e. rendered void at the option of
one (or even, though rarely, of both) of the parties. 9. A … in its widest
sense is the reason, motive, or inducement, by which a man is moved to
bind himself by an agreement. It is not for nothing that he consents to
impose an obligation upon himself, or to abandon or transfer a right. It is
in … of such and such a fact that he agrees to bear new burdens or to
forgo the benefits which the law already allows him. 10. A plane crash
led to dozens of wrongful-death …. 11. The widow found it difficult to
… pain of losing her husband.

Task 5. Translate into Russian.


1. When they finally agreed, they had a contract. 2. When the lessor
learned that the rooms were to be used for the delivery of blasphemous
lectures, he declined to carry out his contract. 3. There was no express
contract about when the money was payable. 4. Contracts under seal also
bear little resemblance to ordinary contracts, although here at least the
liability is based on a promise. A contract under seal, that is to say a
deed, … is a written promise or set of promises which derives its validity
from the form, and the form alone, of the executing instrument. The only
necessities are that the deed should be intended as such, and should be
signed, sealed, and delivered. The sealing, however, has now become
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largely a fiction. Similarly, ‘delivery’ is not literally necessary, provided


that there is a clear intention that the deed should be operative. 5. The
difference between what is voidable and what is unenforceable is mainly
a difference between substance and procedure. A contract may be good,
but incapable of proof owing to lapse of time, want of written form, or
failure to affix a revenue stamp. Writing in the first cases, a stamp in the
last, may satisfy the requirements of law and render the contract
enforceable, but it is never at any time in the power of either party to
avoid the transaction. The contract is unimpeachable, only it cannot be
proved in court. 6. Strictly speaking, a ‘void contract’ is a contradiction
in terms; for the words describe a state of things in which, despite the
intention of the parties, no contract has been made. Yet the expression,
however faulty, is a compendious way of putting a case in which there
has been the outward semblance without the reality of contract. 7. A
consideration has been explained to be ‘any act of the plaintiff from
which the defendant, or a stranger, derives a benefit or advantage, or any
labour, detriment, or inconvenience sustained by the plaintiff, however
small the detriment or inconvenience may be, if such act is performed, or
inconvenience suffered by the plaintiff with the assent, express or
implied, of the defendant, or, in the language of pleading, at the special
instance and request of the defendant.

Task 6. Put in the, a/an where necessary.


a. … undue influence is … unfair persuasion of … party who is under
… domination of … person exercising … persuasion or who by … virtue
of … relation between them is … justified in assuming that … person
will not act in … manner inconsistent with his welfare.
b. When at … tern of … twentieth century, … common law doctrine
of … duress was expanded to provide … relief for … coercion
irrespective of … means of … coercion, much of … work of … undue
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influence became unnecessary. … doctrine has … much more specialised


role today, although often enough … precedents decided when … more
general doctrine prevailed are cited and quoted to … general confusion
of … profession. Today … gist of … doctrine is … unfair persuasion
rather than … coercion. … euphoria rather than … fear is often, but
certainly not always, … state of mind of … party unduly influenced.
c. … phrase ‘good faith’ is used in … variety of contexts, and its
meaning varies somewhat with … context. … good faith performance or
enforcement of … contract emphasises … faithfulness to … agreed
common purpose and … consistency with … justified expectations of …
other party; it excludes … variety of … types of … conduct
characterised as involving ‘bad faith’ because they violate … community
standards of … decency, … fairness or … reasonableness. … appropriate
remedy for … breach of … duty of good faith also varies with …
circumstances.

Part 2.
Intention to create legal relations
Many agreements are plainly never intended by the parties to be legally
binding; there is no intention to take any dispute to a court of law.
In the case of agreements of a friendly, social or domestic nature there is
a strong presumption that the parties did not intend to create a legal
relationship. If friends agree to come to tea and they fail to turn up, or if
a husband agrees to meet his wife and forgets, there can be no action for
breach of contract, even though the complaining party may have incurred
certain expenses.

In Balfour v. Balfour (1919), a husband promised his wife an allowance before he left
to take up a post abroad. When he stopped the payments, an action by the wife failed
on the ground that this was not a binding contract but merely a domestic agreement
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with no legal obligations attached to it.

Conversely, in Simpkins v. Pays (1955), three people sharing a house, the owner, her
granddaughter and paying lodger, regularly entered a competition in a Sunday news-
paper. The entries were sent in the name of the grandmother, but all three
contributed. When an entry won, the grandmother refused to share the prize of £750.
It was held that the others were entitled to share, because their agreement to this
effect was, in the view of the court, intended to be legally binding.

On the other hand, there is a strong presumption that business


agreements are intended to create legal relations. This presumption can
be rebutted, but only by very strong evidence such as a clear statement in
a written contract.

In Rose and Frank v. Crompton Bros Ltd (1925), an English company agreed to sell
carbon paper in America through a New York firm. This marketing arrangement was
for a renewable period of three years and provided that 'This arrangement is not
entered into. . as a formal or legal agreement, and shall not be subject to legal
jurisdiction in the Law Courts ...'. Therefore, when the English company withdrew, it
was not liable for breach of contract, although it was held liable to honour orders
placed before withdrawal.

Similarly, in Appleson v. Littlewood Ltd (1939), the claimant sued to recover money
which he claimed to have won on a football pool. His action failed, because the
printed entry form contained a statement that the transaction was 'binding in honour
only'.

Most collective agreements between employers and trade unions as to


wages and other terms of employment will not be legally binding. The
parties are assumed to have intended the agreement to be no more than a
broad working arrangement, unless they expressly provide in writing that
it is to be legally enforceable.
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Form
In general, the form in which a contract is made does not matter and will
have no effect upon the validity of the contract. However, there are
certain exceptions.
Some contracts must be by deed. Promises for no consideration, and
some bills of sale (mortgages of goods), are void unless in this form.
Most conveyances of land must be completed by deed (see below).
Certain other contracts which must be in writing include bills of
exchange, cheques and promissory notes, contracts of marine insurance,
the transfer of shares in a company, and legal assignment of debts.
Absence of duly signed writing renders such contracts void. Hire-
purchase and other regulated agreements which come within the
Consumer Credit Act 1974 may be unenforceable against the borrower
unless they are made in writing and include the information required
under the Act.
Contracts of guarantee, although not required to be in writing, are
unenforceable in the courts unless there is written evidence of the
essential terms, signed by the guarantor or his agent. This is a historical
survival from the Statute of Frauds 1677. Special rules apply to land. A
conveyance, such as a sale or lease, is normally in two stages. First the
parties contract to sell (or lease) the land. Under the Law of Property
(Miscellaneous Provisions) Act 1989, this contract must be made in
writing in a signed document which 'incorporates' all terms which the
parties have expressly agreed; the terms can either be set out in the
document itself or included by reference to some other document.
Usually in practice two identical documents are prepared, one signed by
the vendor (seller) and handed to the purchasers, the other signed by the
purchasers and handed (with a deposit) to the vendor. The Act allows
this, even though neither document is signed by both parties, so long as
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each copy incorporates all the express terms. None of these formalities
applies to sales by public auction. After the contract, the purchasers
(through their solicitors) usually check the vendor's title to ensure that he
does have the right to sell. If all is well, the transaction will then be
'completed' by conveyance of the title to the purchasers and payment by
them of the (rest of the) price. This conveyance must be made by deed if
the transaction is a sale or a lease for over three years.

Exercises on the text.


Task 1. Read the text and translate it into Russian.
Task 2. Study the following legal terms and supply corresponding
Russian legal terms, use them in situations of your own.
1.intention, n. The willingness to bring about something planned or
foreseen; the state of being set to do something.
2.presumption. A legal inference or assumption that a fact exists, based
on the known or proved existence of some other fact or group of facts. 
Most presumptions are rules of evidence calling for a certain result in a
given case unless the adversely affected party overcomes it with other
evidence. A presumption shifts the burden of production or persuasion to
the opposing party, who can then attempt to overcome the presumption.
3.action. 1. The process of doing something; conduct or behaviour. 2. A
thing done. 3. A civil or criminal judicial proceeding.
4.breach, n. A violation or infraction of a law or obligation <breach of
warranty> <breach of duty>. – breach, vb.
5.breach of contract. Violation of a contractual obligation, either by
failing to perform one’s own promise or by interfering with another
party’s performance.
 active breach of contract. The negligent performance of a
contractual obligation, to the point of acting outside the contract’s terms.
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 anticipatory breach. A breach of contract caused by a party’s


anticipatory repudiation, i.e., unequivocally indicating that the party
will not perform when performance is due.
 continuing breach. A breach of contract that endures for a
considerable time or is repeated at short intervals.
 efficient breach. An intentional breach of contract and payment of
damages by a party who would incur greater economic loss by
performing under the contract.
 material breach. A substantial breach of contract, usu. excusing the
aggrieved party from further performance and affording it the right to
sue for damages.
 partial breach. A breach of contract that is less significant than a
material breach and that gives the aggrieved party a right to damages, but
does not usu. excuse that party from performance.
 passive breach of contract. A failure to perform the requirements
of a contract.
 total breach. A material breach of contract that gives rise to a claim
for damages based on the injured party’s remaining rights to
performance under the contract.
6.incur, vb. To suffer or bring on oneself (a liability or expense). –
incurrence, n. – incurrable, adj.
7.rebut, vb. To refute, oppose, or counteract (something) by evidence,
argument, or contrary proof .
8.renewal, n. 1. The act of restoring or reestablishing. 2. The re-creation
of a legal relationship or the replacement of an old contract with a new
contract, as opposed to the mere extension of a previous relationship or
contract. – renew, vb.
9.liable, adj. Responsible or answerable in law; legally obligated.
10. valid, adj. 1. Legally sufficient; binding ,a valid contract. 2.
Meritorious. – validate, vb. – validation, validity, n.
20

11. bill, n. 1. A formal written complaint, such as a court paper


requesting some specific action for reason alleged. 2. An equitable
pleading by which a claimant brings a claim in a court of equity.
12. bill of exchange, n. An unconditional written order signed by one
person (the drawer) directing another person (the drawee or payor) to
pay a certain sum of money on demand or at a definite time to a third
person (the payee) or to bearer.  A check is the most common example
of a bill of exchange. – Also termed draft; letter of exchange.
13. mortgage, n. 1. A conveyance of title to property that is given as
security for the payment of a debt or the performance of a duty and that
will become void upon payment or performance according to the
stipulated terms. 2. An instrument (such as a deed or contract) specifying
the terms or such a transaction.
14. conveyance, n. 1. The voluntary transfer of a right or of a property.
2. The transfer of property right that does not pass by delivery of a thing
or merely by agreement. 3. A document (usu. a deed) by which such a
transfer occurs.
15. lease, n. 1. A contract by which a rightful possessor of real
property conveys the right to use and occupy that property in exchange
for consideration, usu. rent. 2. The written instrument memorializing
such a conveyance and its covenants. – Also termed lease agreement;
lease contract. 3. The piece of real property so conveyed. 4. A contract
by which the rightful possessor of personal property conveys the right to
use that property in exchange for consideration.
16. sale, n. 1. The transfer of property or title for a price. 2. The
agreement by which such a transfer takes place.  the four elements are
(1) parties competent to contract, (2) mutual assent, (3) a thing capable
of being transferred, and (4) a price in money paid or promised.
17. check, n. A draft signed by the maker or drawer, drawn on a bank,
payable on demand, and unlimited in negotiability.  An instrument may
21

be a check even though it is described on its face by another term, such


as “money order”.
18. promissory note. An unconditional written promise, signed by the
maker, to pay absolutely and in any event a certain sum of money either
to, or to the order of, the bearer or a designated person. – Also termed
note of hand.
19. hire-purchase agreement. a rent-to-own purchase plan under
which the buyer takes possession of goods with the first payment and
takes ownership with the final payment. – Also termed lease-purchase
agreement; lease-to-purchase agreement; capital lease.  Such a lease is
usu. treated as an installment sale.
20. title. 1. The union of all elements (as ownership, possession, and
custody) constituting the legal right to control and dispose of property;
the legal link between a person who owns property and the property
itself. 2. Legal evidence of a person’s ownership rights in property; an
instrument (such as a deed) that constitutes such evidence.

Task 3. Answer the following questions.


1. Are all agreements intended to be legally binding? Why (not)?
2. What examples of agreements of a friendly, social or domestic
nature can you give?
3. What can you say about business agreements, collective agreements
between employers and trade unions?
4. Is the form of the contract important? Why (not)?
5. What contracts must be in writing?
6. What can you say about contracts of guarantee?
Task 4. Fill in the appropriate legal term.
action bill intention valid title rebut
valid

1. … is the purpose or design with which an act is done. 2. An … has


22

been defined to be an ordinary proceeding in a court of justice, by which


one party prosecutes another party for the enforcement or protection of a
right, the redress or prevention of a wrong, or the punishment of a public
offense. 3. The defense’s expert … the opponent’s expert testimony. 4.
That is a … conclusion based on the facts presented in this case. 5. The
statement of the plaintiff’s cause of action in equity is called the …. To
this … the defendant (unless he could protect himself by a demurrer or a
plea) was obliged to put in an answer under oath. 6. It turned out that no
one had … to that land.

Task 5. Translate into Russian.


1. The terms ‘action’ and ‘suit’ are nearly if not quite synonymous. But
lawyers usually speak of proceedings in courts of law as ‘actions’, and of
those in courts of equity as ‘suits’. In old times there was a more marked
distinction, for an action was considered as terminating when judgement
was rendered, the execution forming no part of it. A suit, on the other
hand, included the execution. The word ‘suit’ as used in the Judiciary Act
of 1784 and later Federal statutes, applies to any proceeding in a court of
justice in which a plaintiff pursues in such court the remedy which the
law affords him. 2. Before the merger of law and equity, the bill of equity
was analogous to a declaration in law. The nine parts of every equitable
bill are (1) the address to the person holding the great seal, (2) the
introduction, which identifies the parties, (3) the premises, which state
the plaintiff’s case, (4) the confederating part, in which the defendants
are charged with combination, (5) the charging part, in which the
plaintiff may try to overcome defenses that the defendants may allege,
(6) the jurisdictional clause, showing that the court has jurisdiction, (7)
the interrogating part, inserted to try to compel a full and complete
answer, (8) the prayer for relief, and (9) the prayer for process to compel
the defendants to appear and answer.
23

Task 6. Fill in the, a/an where necessary.


1. … presumption may be defined to be … inference as to … existence
of one fact from … existence of some other fact founded upon …
previous experience of their connection. 2. … breach may be done by …
non-performance, or by … repudiation, or by both. Every breach gives
rise to … claim for … damages, and may give rise to … other remedies.
Even if … injured party sustains no pecuniary loss or is unable to show
such … loss with … sufficient certainty, he has at least … claim for …
nominal damages. If … court chooses to ignore … trifling departure,
there is … no breach and … no claim arises. 3. Under … capital lease,
… lessee is responsible for paying … taxes and … other expenses on …
property.

Task 7. Explain the meaning of the following legal terms, use them in
situations of your own.

To be held liable; claimant; to incur expenses; to be legally enforceable;


validity of a contract; bill for sale; mortgage of goods; conveyance of
land;

Part 3.
Consideration.
As stated above, the English law of contract is concerned with bargains,
not mere promises. Thus if A promises to give something to B, the law
will not allow any remedy if A breaks his promise. On the other hand, if
В promises to do (or does) something in return, so that A's promise is
dependent upon B's, this reciprocal element, the exchange of promises,
turns the arrangement into a contract. To use legal terminology, A's
promise (or action) is the 'consideration' for B's, and vice versa. Thus,
24

the promise of the seller to deliver the car is consideration for the buyer's
promise to pay the agreed price.
Consideration may, therefore, be described broadly as something given,
promised or done in exchange. The act, forbearance or promise of each
party is the price for which the promise of the other is bought.
Consideration can be executory or executed. Executory consideration is
a promise yet to be fulfilled, and most contracts start in this way, with
the consideration executory on both sides. Executed consideration is the
completed performance of one side of the bargain.

The existence of consideration


Consideration must exist and have some value; otherwise there is no
contract. The following may have no value and may not, therefore,
constitute consideration so as to render a promise actionable:
1. Past consideration. Something already done and completed by В at
the time when A makes a promise to him cannot operate as
consideration. A already has the benefit of what В has done, and В
therefore receives nothing in exchange. Thus if, unasked, I paint my
neighbour's house while he is away and, upon his return, he promises me
£100 for doing so, I have no remedy if he later refuses to pay.

In Eastwood v. Kenyan (1840), the claimant had been the guardian of a Miss
Sutcliffe, and had spent money on her upkeep and education. When she came of age,
the girl promised to repay her guardian, and her husband, Kenyon, repeated this
promise when she married. It was held, however, that the guardian could not recover
damages when these promises were broken, because the consideration for them was
past. Any moral obligation to repay was irrelevant.

Similarly, in Roscorla v. Thomas (1842), after Roscorla had bought a horse, the seller
promised that it was sound and free from vice. It was held that Roscorla could not
sue for breach of this undertaking, for which no new consideration had been given.
(This would apply equally to promises made by a car salesman after the sale.)
25

A contrast must be drawn with those situations where, although the


actual promise to pay a specific sum is made after the work has been
carried out, there was an implied promise to pay (a reasonable sum)
before the work was begun. If my neighbour asks me to paint his house,
he may be impliedly promising to pay me for my work.

In Stewart v. Casey (1892), Stewart, who was joint owner of some patents, asked
Casey to promote them. After Casey had done so successfully, Stewart promised him
a share in them. It was held that this promise was binding, and that the consideration
was not past. The original request carried with it an implied promise to pay a
reasonable amount for Casey's services; the contract was made then. The subsequent
promise to share in the profits merely put a figure to the original promise, which was
given before Casey carried out his side of the bargain.

2. A promise to perform an existing obligation. This may not be


consideration, because the promisor is only giving what he was already
bound to give.
(a) This applies particularly if the promisor merely promises afresh to
perform an existing contract with the promisee. Therefore, if a debtor
promises to pay part of his debt in consideration of the creditor releasing
him from the rest, the release is not binding. If A is owed £10 by В and
agrees to take £9 in full satisfaction, A can still go back and demand the
remaining £1. В gave no consideration for the promise to release him
from the £1.

In D & С Builders Ltd v. Rees (1966), the defendant owed £482 to the builders for
work carried out, and refused to pay. Eventually the builders agreed to take a cheque
for £300 in full satisfaction of the debt. It was held that they were still entitled to the
remaining £182, because there was no consideration for the earlier promise to settle
for less.
26

Similarly, if a debt is due now, an agreement to allow payment later (for


example by instalments) is not binding.

In Re Selectmove Ltd (1995), The Inland Revenue gave a debtor leave to pay arrears
of taxes by instalments. This was not binding. The whole arrears were due now, and
the debtor gave no consideration for the Revenue's promise of extra time.

The promise to forgo part of the debt will be binding, however, if the
debtor gives some new consideration, by doing or promising something
which he was not previously bound to do; for example paying the debt
earlier than he was bound to do, or at a place other than where he was
bound to do. These rules apply equally to obligations other than debts.
Where new promises are made in return for work due, there may also be
new consideration if: (i) circumstances have changed since the original
contract, so as to make it especially difficult for one party to carry out his
side of the bargain; (ii) the other party particularly needs to have the
contract performed, and therefore promises extra money for this benefit;
and (iii) there is no suggestion of fraud or duress.

In Williams v. Roffey Bros (1989), builders had a contract to refurbish a block of flats.
They subcontracted the carpentry work to the claimants for a fixed sum of £20000.
Before the carpentry work was done, the carpenters were in financial difficulties, and
would be unable to complete their subcontract. The builders feared that they
themselves would therefore be unable to complete the refurbishment on time, and
would therefore incur a large time penalty to the owners. To escape this, on their own
initiative, they promised the carpenters extra money to help them complete the
carpentry promptly. This promise was held binding even though the carpenters were
only carrying out their original obligations. The promise had been given for the
builders' own benefit and on their own initiative, and this was the consideration for
the extra sum.

This case does not apply if the promisee's only obligation is to pay a debt
27

(as in D&C Builders v. Rees, see above). Nor would it apply if a


workman demanded extra payment from a builder who was desperate for
prompt performance.

(b) The position is more simple as regards a promise to perform a


contract which the promisor already has with a third party. This can be
binding. The promisor is undertaking a new duty to the promisee in
addition to the one which he already has to the third party. He now has
two obligations, not just one, and this is the consideration.

In Pao On v. Lau Yiu Long (1979), for example, the defendants gave Pao On a
guarantee in consideration of Pao On promising to carry out a contract which Pao On
had with Fu Chip Ltd. Pao On's promise was good consideration for the guarantee.

(c) A promise to perform an existing public duty will not usually be


consideration. For example, it would be contrary to public policy to
allow a public official to take (and, therefore, possibly demand) private
payment for carrying out his public duty. However, a promise to do more
than his duty can be enough.

In Glasbrook Bros. Ltd v. Glamorgan County Council (1925), the police were offered
£2000 to provide a special guard for a coal mine during a strike. It was held that they
could recover this amount when the owners later refused to pay, because the special
guard went beyond the ordinary police duty to protect property.

In Harris v. Sheffield United F. C. Ltd (1987), the police authority was held entitled
to payment for providing officers inside the football ground during matches.

If it can be shown that a promise to carry out a public or general duty is


not contrary to public policy (e.g. a promise by a man or woman to
maintain his or her family), then it might be consideration.
28

3. A promise made to a third party. Normally, only a person who has


given consideration may sue on a contract. For example, A may promise
to pay £1 to B, if В will give a book to C. If В refuses to deliver the
book, A may sue, but not C, who has given no consideration and is not a
party to the contract. However, by the Contracts (Rights of Third Parties)
Act 1999, a third party ('C' in the above example) can enforce a term of
the contract if (a) the contract expressly provides that he may; or (b)
(normally) if the term purports to confer a benefit on him. Therefore, in
the above example, С might have a right of action against B. This is
discussed more fully in Unit 6.

4. Vague promises, which are incapable of monetary value, will not be


consideration. A promise to show natural love and affection or to behave
as a good son should behave will be of no effect in the law of contract.
The adequacy of consideration
Provided that the consideration has some value in the monetary sense,
the court will not concern itself with whether or not the value is
adequate, for the value of a particular article or service is largely a matter
of opinion and for the parties to decide. The court will not make a man's
bargain for him. The price paid may be relevant in determining whether
goods are of a satisfactory quality at that price, but this does not directly
affect the existence of the contract. The fact that goods are sold for a
very high or low price may also be evidence, but no more than evidence,
of fraud.
29

Promises made by deed


There is one major exception to the rules relating to consideration. Where a
person embodies his promise in a formal document called a deed, it can be
enforced against him whether or not the promisee has given any
consideration. A deed is a document signed by the person making the
promise; the signature must be 'attested' by a witness who also signs; and
the document must be 'delivered' by the promisor. Delivery in this sense
does not necessarily require the deed to be handed over but is merely
conduct showing an intention to be bound by it. The Law of Property
(Miscellaneous Provisions) Act 1989 removed the need for a deed to be
'sealed', provided that there is a clear intention to execute a deed and that
the signature is witnessed; there is also, in the case of transfer of land, a
conclusive presumption that a solicitor or licensed conveyancer has
authority to 'deliver' the deed on behalf of the signatory. Promises made by
deed are sometimes called specialty contracts, as opposed to simple
contracts when a deed is not used.
Equitable estoppel
Although a promise made without consideration cannot be sued upon, and
will not amount to a contract, it may have limited effect as a defence. If A
promises not to enforce his rights against B, and the promise is intended to
be binding, intended to be acted upon, and is in fact acted upon by B, then
A may be estopped from later bringing any action inconsistent with his
promise. This defence has been called promissory estoppel.

In Central London Property Trust v. High Trees House (1947), the lease of a block of
flats proved unprofitable to the tenant because of the war, and the landlord made a
written promise to reduce the rent while the war lasted. After the war, the landlord
withdrew this promise and started to charge the full rent again. It was held that he was
free to do this for the future, because no consideration had been given for the wartime
promise. On the other hand, the court said, obiter, that the landlord could not have
recovered the full rent for the period between making his promise and the end of the
30

war since the tenant had relied on the landlord's promise.

This defence is limited, and only applies where it would be unfair and
inequitable to allow the claimant to succeed in spite of his promise.
In D & С Builders Ltd v. Rees (see above), it was also suggested that the
builders should be estopped from going back on their promise to take £300
in full satisfaction. This defence failed because it was not grossly unfair to
demand the balance. If anyone it was Rees who was unfair, in failing to pay
the full amount and putting pressure on the builders, who had financial
difficulties, to settle for less. Certainly Rees had not been made to act to his
detriment as a result of the promise.
Moreover, in the light of Williams v. Roffey Bros (see above), there may
now be fewer situations in which a party has to rely on promissory
estoppel. In the High Trees case itself, for example, it might now be held
that the tenant had given consideration for the landlord's promise to reduce
the rent during the war. Circumstances had changed since the original
lease; the landlord did, for his own benefit, still need to have a tenant to
look after the property during the war; and there was no suggestion of fraud
or duress by the tenant. Therefore, although the decision would probably be
the same today, the ratio decidendi and obiter dicta might be different.

Exercises on the text.


Task 1. Read the text and translate it into Russian.
Task 2. Study the following legal terms and their definitions, supply
corresponding Russian terms, use them in situations of your own.
1. satisfaction, n. 1. The giving of something with the intention, express
or implied, that it is to the extinguish some existing legal or moral
obligation.  Satisfaction differs from performance because it is always
something else, while performance is the identical thing promised to be
31

done. 2. The fulfillment of an obligation; esp., the payment in full of a debt.


– satisfy, vb.
2. performance, n. 1. The successful completion of a contractual duty,
usu. resulting in the performer’s release from any past or future liability. –
Also termed full performance. – perform, vb. 2. The equitable doctrine by
which acts consistent with an intention to fulfill an obligation are construed
to be in fulfillment of that obligation, even if the party was silent on the
point. 3. A company’s earnings. 4. The ability of a corporation to maintain
or increase earnings.
3. entitle, vb. Th grant a legal right to or qualify for.
4. entitlement, n. An absolute right to a (usu. monetary) benefit, such as
social security, granted immediately upon meeting a legal requirement.
5. arrear, n. (usu. pl.) 1. The state of being behind in the payment of a
debt or the discharge of an obligation. – Also termed arrearage. 2. An
unpaid or over due debt. 3. An unfinished duty.
6. promise, n. 1. The manifestation of an intention to act or refrain from
acting in a specified manner, conveyed in such a way that another is
justified in understanding that a commitment has been made; a person’s
assurance that the person will or will not do something.  a binding promise
– one that the law will enforce – is the essence of a contract. 2. The words
in a promissory note expressing the maker’s intention to pay a debt.  a
mere written acknowledgement that a debt is due is insufficient to
constitute a promise. – promise, vb.
7. promisor, n. One who makes a promise; esp., one who undertakes a
contractual obligation.
8. guarantee, n. 1. The assurance that a contract or legal act will be duly
carried out. 2. A promise to answer for the payment of some debt, or the
performance of some duty, in case of the failure of another who is liable in
the first instance.  The term is most common in finance and banking
contexts. While a warranty relates to things (not persons), is not collateral,
32

and need not be in writing, a guarantee is an undertaking that a person will


pay or do some act, is collateral to the duty of the primary obligor, and
must be in writing. – Also termed guaranty. 3. Something given or existing
as security, such as to fulfill a future engagement or a condition subsequent.
4. One to whom a guaranty is made.
9. duty, n. 1. A legal obligation that is owed or due to another and that
needs to be satisfied; an obligation for which somebody else has a
corresponding right. 2. Any action, performance, task, or observance owed
by a person in an official or fiduciary capacity.
legal duty. A duty arising by contract or by operation of law; an obligation
the breach of which would be a legal wrong.
moral duty. A duty the breach of which would be a moral wrong. – Also
termed natural duty.
10. public-duty doctrine. Torts. The rule that a governmental entity
(such as a state or municipality) cannot be held liable for an individual
plaintiff’s injury resulting from a governmental officer’s or employee’s
breach of a duty owed to the general public rather than to the individual
plaintiff. – Also termed public-duty rule.
11. public policy. 1. Broadly, principles and standards regarded by the
legislature or by the courts as being of fundamental concern to the state and
the whole of society.  Courts sometimes use the term to justify their
decisions, as when declaring a contract void because it is “contrary to
public policy”. – Also termed policy of the law. 2. More narrowly, the
principle that a person should not be allowed to do anything that would
tend to injure the public at large.
12. adequate, adj. Legally sufficient.
13. value, n. 1. The monetary worth or price of something; the amount of
goods, services, or money that something will command in an exchange. 2.
The significance, desirability, or utility of something. 3. Sufficient
contractual consideration. – value, vb. – valuation, n.
33

14. conclusive presumption. A presumption that cannot be overcome by


any additional evidence or argument. – Also termed absolute presumption;
irrebuttable presumption; mandatory presumption; presumption juris et de
jure.
15. equitable, adj. 1. Just; conformable to principles of justice and right.
2. Existing in equity; available or sustainable by an action in equity, or
under the rules and principles of equity.
16. estoppel, n. 1. A bar that prevents one from asserting a claim or right
that contradicts what one has said or done before or what has been legally
established as true. 2. A bar that prevents the relitigation of issues. 3. An
affirmative defense alleging good-faith reliance on a misleading
representation and an injury or detrimental change in position resulting
from that reliance.
equitable estoppel. 1. A defensive doctrine preventing one party from
taking unfair advantage of another when, through false language or
conduct, the person to be estopped has induced another person to act in a
certain way, with the result that the other person has been injured in some
way.  This doctrine is founded on principles of fraud. The five essential
elements for this type of estoppel are (1) that there was a false
representation or concealment of material facts, (2) that the representation
must have been known to be false by the party making it, or the party must
have been negligent in not knowing its falsity, (3) that it was believed to be
true by the person to whom it was made, (4) that the party making the
representation must have intended that it be acted on, or the person acting
on it must have been justified in assuming this intent, and (5) that the party
asserting estoppel acted on the representation in a way that will result in
substantial prejudice unless the claim of estoppel succeeds. – Also termed
estoppel by conduct; estoppel in pais. 2. See promissory estoppel.
promissory estoppel. The principle that a promise made without
consideration may nonetheless be enforced to prevent injustice if the
34

promisor should have reasonably expected the promisee to rely on the


promise and if the promisee did actually rely on the promise to his or her
detriment. – Also termed (inaccurately) equitable estoppel.
17. estop, vb. To bar or prevent by estoppel.
18. inconsistent, adj. Lacking consistency; not compatible with another
fact or claim.
19. detriment. 1. Any loss or harm suffered by a person or property. 2.
Contracts. The relinquishment of some legal right that a promisee would
have otherwise been entitled to exercise.
 detriment to a promisee. Contracts. Consideration offered by a promisee
to a promisor, esp. in a unilateral contract requiring an act from the
promisee though the promisor has the power to revoke the promise.

Task 3. Answer the following questions.


1. What is consideration? Why is this element of contract so important?
2. What kinds of consideration can you name?
3. In what case is it said that there is no consideration? Name all the
cases.
4. What is past consideration? Give examples to illustrate the notion of
past consideration.
5. What rules concern a promise to perform an existing obligation?
6. What can you say about the terms concerning the payment of a debt?
7. Will a promise to perform an existing public duty be a consideration?
Why (not)?
8. What rules concern a promise made to a third party?
9. What can you say about adequacy of consideration?
10. What rules concern promises made by deed?
11. What does the notion of equitable estoppel mean?

Task 4. Fill in the appropriate legal term.


35

promise (2) ∙ arrears ∙ legal duty ∙ promisor ∙ contract agreement ∙


conclusive presumption

1. The creditor filed a lawsuit against the debtor who was in … (arrears). 2.
By common usage, a … is an expression leading another person justifiably
to expect certain conduct on the part of the … . Such an expression is a …,
whether enforceable at law or not. It is indeed an essential element in every
… . Society does not guarantee the fulfillment of all expectations so
induced. 3. When people decide to have a baby they must realise their …
to support the child. 4. It is … that a child under the age of seven is
incapable of committing a felony. 5. The creditor reached an … with the
debtor on setting the ….

Task 5. Translate into Russian.


1. It is well to make clear two points at the outset … The first is that I do
not believe that all promises are morally binding; accordingly, I use the
term ‘promise’ without prejudging the question whether the promise creates
an obligation. The second is that, where a promise does create an
obligation, the reason for that may depend upon whether the promise was
explicit or implied. There is thus, in my view, a fundamental distinction
between explicit and implied promises, and when I use the word ‘promise’
without qualification, I normally mean an explicit promise. (P.S. Atiyah,
Promises, Morals, and Law). 2. Both guaranty and warranty are
undertakings by one party to another to indemnify the party assured
against some possible default or defect. But a guaranty relates to the future,
as a collateral promise designed to protect the promisee from loss in case
another fails to perform his duty. A warranty relates to the present or past,
and is an independent promise designed to protect the promisee from loss
in the event that the facts warranted are not as the promisor states them to
be when the contract is made. A warranty is broken as soon as it is made if
the facts are not as represented and is enforceable though oral; whereas a
36

guaranty is not breached until a future default occurs, and is unenforceable


unless in writing. 3. The police of the law, or public police, is a phrase of
common use estimating the validity of contracts. Its history is obscure; it is
most likely that agreements which tended to restrain trade or to promote
litigation were the first to elicit the principle that the courts would look to
the interests of the public in giving efficacy to contracts. Wagers, while
they continued to be legal, were a frequent provocative of judicial
ingenuity on this point,… but it does not seem probable that the doctrine of
public policy began to endeavour to elude their binding force. Whatever
may have been its origin, it was applied very frequently, and not always
with the happiest results, during the latter part of the eighteenth and the
commencement of the nineteenth century. Modern decisions, however,
while maintaining the duty of the courts to consider the public advantage,
have tended more and more to limit the sphere within which this duty may
be exercised.
Task 6. Fill in the, a/an where necessary.
1. … promise means not only … physical manifestations of … assurance
by … words or … conduct, but also … moral duty to make … good …
assurance by … performance. If by … reason of … other objective facts …
promise is recognized as creating … legal duty, … promise is … contract.
2. … transaction of … guaranty involves at least three parties: … promisor,
… creditor (…person to whom … promise is made), and … debtor –
although at … time … promise is made, … person denominated …
‘creditor’ need not have extended … credit to … person denominated as …
‘debtor’. … usual guaranty situation arises when … promisor makes …
promise to … creditor either as to … solvency of … debtor or as to …
payment of … debt. 3. … conclusive presumption, sometimes called …
irrebuttable presumptions, are … really … rules of law. Thus it is said that
… child under … age of fourteen years is conclusively presumed to be
incapable of committing … rape. This is only … other way of saying that
37

such … child cannot be found guilty of … rape. 4. … doctrine of …


promissory estoppel is equitable in … origin and … nature and arose to
provide … remedy through … enforcement of … gratuitous promise.
Promissory is distinct from … equitable estoppel in that … representation
of … fact. … promissory estoppel and … estoppel by conduct are two
entirely distinct theories. … latter does not require … promise.

Task 7. Paraphrase or explain.


1. … to constitute consideration so as to render a promise actionable…
2. … any moral obligation to pay was irrelevant…
3. He did what he was bound to give.
4. New promises were made in return for work due.
5. The promise was given for the builders’ benefit.

Test your professional English.


Task 1. Here is a brief summary of the law of contract. complete the texts using the words in the box.
agreement · breach · capacity · consideration ·
damages · fraud ·illegal · obligation · oral ·
performance · property · signed · terms
What is a contract?
It is an agreement that creates a binding _______________ upon the
parties. The essentials of a contract are as follows: mutual ___________; a
legal ______________, which in most instances need not be financial;
parties who have legal ___________ to make a contract; absence of
_____________ or duress; and a subject matter that is not ___________ or
against public policy.
What form does a contract take?
In general, contracts may be either _____________ or written. Certain
types of contracts, however, in order to be enforceable, must be written and
____________ . These include contracts involving the sale and transfer of
38

___________ .
How does a contract end?
In case of a ____________ of contract, the injured party may go to court to
sue for financial compensation (or ____________), or for rescission, for
injunction, or for specific performance if financial compensation would not
compensate for the breach. Specific ____________ of a contract is the right
by one contracting party to have the other contracting party perform the
contract according to the precise _____________ agreed.

Task 2. Rewrite the sentences below, changing the verbs in bold to


nouns. Don’t change the meaning of the sentences, but be prepared to
make grammatical changes if necessary.
E.g. The prisoner was interrogated for three hours.
The prisoner’s interrogation lasted for three hours.
1. He was induced to steal the plans by an offer of a large amount of
money.
The offer of a large amount of money was his __________________
2. The terms of the contract will be enforced.
There will be an __________________________________________
3. He is authorized to act on our behalf. He has ___________________
4. The contract was rescinded last year. The ______________________
5. You will be punished for hitting the policeman. You face __________
6. The newspaper report stated that he had been prosecuted for
embezzlement. His ________________________________________
7. The irregularities in share dealings were investigated. The _________
8. He inherited $10,000 from his grandfather. His _________________
9. The witness cancelled today’s appointment last week. The witness’
________________________________________________________
10. They argued with the judge over the relevance of the documents to
the case. They got into an ___________________________________
39

Task 3. Use the verbs from the box to complete the sentences.
adjourn  approve  arbitrate  bribe  dismiss  earn
employ  evict  issue  obligate  reach  recommend 
rescind testify  withhold

1. The jury was unable to ______________ a unanimous decision.


2. The new landlord has started proceedings to _______________ all the
tenants.
3. I am sure the board will ________________ your proposal: it’s just
the sort of thing they’re looking for at the moment.
4. The policeman warned him that it was illegal to ___________
evidence.
5. How much dividend do these shares _______________ ?
6. The minister was desperate and even tried to _______________ the
policeman to get the charges dropped.
7. Unfortunately the committee has had to ____________ its earlier
decision on the use of local government premises.
8. This tribunal will now _______________ until tomorrow at 10 a.m.
9. How many people does the company ____________ ?
10. Are you ready to _______________ in court that this is what
happened?
11. The company is going public and they are going to ____________
25,000 shares.
12. Do you realise that this contract will ____________ you to buy a
minimum quantity of goods each year?
13. This evidence is hearsay and I call upon the court to __________ it.
14. The prisoner’s behaviour has been good and I am going to
_________ him for parole.
15. The management and the union could not agree and they called in an
40

industrial tribunal to ______________ .

Task 4. Use the past tense forms to complete the sentences.


accuse  acquit  arrest  award  confess 
charge  drop engage  fine  grant 
imprison  plead  release seize  serve
1. After six hours of questioning the accused man _____________ .
2. The government _____________ an amnesty to all political prisoners.
3. Her boss _______ her of stealing $250.
4. The secret police _____________ him for six months in a high
security jail.
5. We _______________ the best commercial lawyer we could find to
represent us but we still lost the case.
6. The prisoner _______________ guilty to all charges.
7. On 12 August they _______________ him with murder.
8. The policeman stopped the car and ______________ the driver.
9. The president _____________ the opposition leader from prison.
10. The court ____________ him $2,500 for obtaining money by false
pretenses.
11. After consideration, the plaintiff ______________ the case against
his neighbour.
12. The customs ____________ the shipment of books.
13. He __________ six months in a local prison.
14. The Crown Court _______________ the plaintiff $75,000 in damages
plus costs.
15. Two of the men were sent to prison, but the judge ______________
the third.

Task 5. A. There are three possible patterns for three-syllable words


in the English language. Look at these examples and practice saying
41

them.

Syllable stressed Example


The first 1-2-3 cri-mi-nal; occ-u-pant; le-gis-late
The second 1-2-3 fi-nan-cial; co-llec-tion; ex-po-sure
The third 1-2-3 le-ga-tee; dis-po-ssess; con-tra-vene

B. Read the conversations below and underline all the three-syllable


words; classify them in the groups according to the syllable stressed.
1. “Have you seen the evidence? It looks very strong.”
“Yes, but we still expect an acquittal.”
“Do you really think she’s innocent?”
“Wait until you see the forensic report.”
2. “I hear the Appeal Court disapproved of the decision.”
“Yes, they said that the indictment was incorrect.”
“What’s Jack’s opinion?”
“Oh, he’s very upset.”
3. “Would you recommend buying shares in Giant Plc?”
“No. Their performance has been poor lately. There are better companies.”
“For example?”
“I’ve made a selection for you to consider. Let me give you a copy.”
4. “Have you heard about Giant? One of their employees embezzled
over $2000,000 in six months.”
“No. Who was it?”
“They don’t know yet but it may have been the director of the accounts
department.”
“Do you think they’ll prosecute?”
5. “Look at this. Another case of government corruption.”
“Is that the thing about the Minister for the Arts?”
“No, it’s the Treasury Secretary. He’s been accused of insider trading.”
“What are the details?”
42

The first The second syllable The third syllable


syllable tressed stressed stressed

Task 6. Render into English.


Договор – это соглашение двух или нескольких лиц об
установлении, изменении или прекращении гражданских прав и
обязанностей.
Договор – это двусторонняя или многосторонняя сделка, поэтому
к договорам применяются все нормы, касающиеся таких сделок. Но не
любая сделка есть договор, поскольку односторонние сделки к
договорам не относятся. На договоры распространяются нормы о
недействительности сделок.
Договор характеризуется как юридический факт, относящийся к
правомерным действиям, направленным на достижение
определенного правового результата (установление, изменение,
прекращение гражданских прав и обязанностей).
Договор представляет собой волевой акт.
Принципы гражданско-правового договора:
43

 Юридическое равенство сторон.


 Экономическая независимость сторон.
 Свобода договора.
Стороны сами определяют заключать или не заключать договор, а
также содержание договора. Стороны вправе заключать договоры, как
предусмотренные, так и не предусмотренные законом или иными
правовыми актами, но им не противоречащие.
 Взаимодействие договора и закона.
 Диспозитивность норм. (Возможность распоряжаться
процессуальными средствами защиты, материальными и
процессуальными правами).
 Применение обычаев делового оборота.
 Соблюдение договорной дисциплины (договор имеет силу закона
для его участников).
 Определение условий договора – по усмотрению сторон, кроме
случаев, когда содержание соответствующего условия предписано
законом или иными правовыми актами.
 Ответственность за неисполнение/ ненадлежащее исполнение.
(При нарушении договора для должники создаются неблагоприятные
имущественные последствия).
 Вина как условие ответственности. (Неблагоприятные
последствия наступают, как правило, при виновном поведении
должника. Но имеются и исключения из этого правила).
 Презумпция вины должника. (При нарушении договора должник
автоматически считается виноватым. Должник имеет право
доказывать свою невиновность).

Task 7. Topics for discussion.


1. Explain, with examples:
44

(a) the distinction between void, voidable and unenforceable contracts; and
(b) the effect of this distinction when goods are subsequently transferred to
third parties.
2. Explain whether or not Henry has a remedy in respect of each of the
following agreements:
(a) His daughter has a knitting machine and makes jerseys in her spare
time. Henry promises to sell these in his shop and advertises them
accordingly. His daughter then gives up knitting and fails to deliver any.
(b) He agrees to buy a consignment of socks from a wholesaler. The
contract contains a clause excluding the jurisdiction of the courts. The
wholesaler fails to deliver the goods.
(c) He agrees with a trade union regarding a productivity bonus scheme for
his shop assistants. The union fails to honour the agreement.
3. Explain whether Paul is required by the law of contract to fulfil his
promises in the following situations:
(a) He promises to sell an expensive car to Arthur for £10.
(b) He returns home to find that his house windows have been cleaned by
Bernard and he promises to pay Bernard £10 for his work.
(c) He agrees to pay Charles £100 for painting his house within three weeks
and he later promises a further £20 if Charles finishes the job on time.
(d) He promises to release Frank from a debt of £500 if Frank pays him
£400.
4. Worsted, a clothing manufacturer, is in financial difficulties and is
looking for short-term remedies which might help him. He has an order
from Bernard for delivery on a fixed future date and he writes to Bernard
saying that he cannot guarantee that delivery unless Bernard promises to
pay an additional sum to cover overtime working; Bernard makes that
promise.
Worsted next approaches David, a debtor, and says that if David
immediately pays 50% of the outstanding debt he will forget the balance;
45

David makes thai payment. Worsted also agrees to sell some of his stock to
Eric for a ridiculously low price.
You are required to explain whether Worsted may:
(a) recover the additional sum promised by Bernard;
(b) recover the balance of the debt from David;
(c) refuse to deliver the goods to Eric.

Unit 2. Agreement
Part 1.
Unit 1 is concerned with some of the essential features which must be
present in an agreement before English law will recognize it as a contract.
This unit is concerned with how and when agreement is reached.
There is a difference between the situation where negotiations are in
progress and the situation where a binding agreement has been reached.
During negotiations, each side is free to withdraw without any sanction;
after agreement has been concluded, withdrawal can amount to breach of
contract. Agreement is usually shown in English law by the unconditional
acceptance of an offer, and these elements will be examined in turn.
Offer
This is a statement of the terms on which the offerer is willing to be bound.
If the offer is accepted as it stands, agreement is made.
An offer may be made to a specific person and only open to him to
accept, as where A offers to sell his car to В for a stated price. An offer may
be made to a class of persons, any one of whom may accept, as when the
offer is only open to employees of a company or members of a particular
club. An offer may, sometimes, be made to the whole world, as where the
owner offers a reward to anyone who returns his lost canary; see also First
Sport Ltd v. Barclay's Bank, later.
The following are not offers in this legal sense:
1. A mere invitation to treat. This is an indication that a person is willing to
46

enter into negotiations, but not that he is yet willing to be bound by the
terms mentioned.

In Gibson v. Manchester City Council (1979), Mr Gibson, a council tenant, received a


letter from the Council saying that the Council 'may be prepared to sell the house to you
at the purchase price of... £2180'. Mr Gibson formally applied to buy at this price, but
meanwhile Council policy was changed and it refused to sell. It was held that the
Council's letter was only an invitation to treat, not an offer. Therefore, there was no
contract.

Catalogues or circulars advertising goods for sale constitute mere


invitations. The same applies when a large undertaking invites tenders for
the supply of goods or services. A company prospectus which invites
investors to buy its shares is also an invitation to treat and not an offer,
because the company can still refuse to allot the shares to those who apply
for them.
In many cases where a person indicates that he is willing to deal with
anyone in the world, as in the examples just given, this will be treated as a
mere invitation to treat; otherwise there would be an impossible situation if,
for example, an advertisement to sell a car were held to be a firm offer, and
20 acceptances were received. Only in cases where the advertiser very
clearly intended to be bound will an advertisement be treated as a firm
offer.
Perhaps the best examples of invitation to treat are goods in a shop
window, even with price tickets attached. The shopkeeper does not
undertake to sell the goods. They are on display merely to invite customers
to come in and offer to buy at the price shown. The shopkeeper can always
refuse, although obviously he rarely does so. The same rule applies to the
display of goods in a self-service store.

In Pharmaceutical Society of Great Britain v. Boots Cash Chemists (1953), a criminal


47

case, customers selected pharmaceutical goods from self-service counters, and paid later
at the cash desk, where a pharmacist was in attendance with the cashier. It was held that
the display on the shelves was a mere invitation to treat. The customer made the offer
when he took the goods to the cashier, who could always refuse to sell. Therefore, the
pharmacist was present where the sale took place.

2. A 'mere puff' or boast, which no one would take too seriously, such as a
claim on the packet that 'Brand X washes whitest', will not be treated as a
firm offer. There can, however, be a narrow borderline between mere
boasts, and promises which a reasonable man would take seriously.
In Carlill v. Carbolic Smoke Ball Co. (1893), the defendants advertised that they would
pay £100 to anyone who caught influenza after using their smoke balls, and that, as
evidence of their sincerity, they had deposited £1000 with a named bank. Mrs Carlill
followed their instructions, but still caught influenza, and consequently claimed £100.
One of the many defences put forward was that the advertisement was not an offer. It
was held that, in the circumstances, it was an offer. A reasonable person would take the
promise seriously, and assume that the advertiser intended to be bound on the terms
stated.

3. A declaration of intention is, similarly, not intended to form the basis of a


contract, and is not an offer.

In Harris v. Nickerson (1873), an auction sale was advertised and later cancelled, and
the claimant, who had travelled to the place of sale, claimed his travelling expenses as
damages. His action failed, for the advertisement was not an offer which he could
accept by making the journey.

4. Merely giving information is not an offer.

In Harvey v. Facey (1893), the claimant telegraphed 'will you sell us Bumper Hall Pen?
Telegraph lowest price', and the reply was 'lowest price for Bumper Hall Pen £900'. This
was held to be merely an answer to a request for information, and not an offer which
could be accepted.
48

An offer must be communicated to the other party, unless the offeree is


aware of the offer he is unable to accept it. If X finds a wallet and returns it
to the owner, he cannot claim any reward that may have been offered if he
had no previous knowledge of this.

In Taylor v. Laird (1856), the captain of a ship resigned his command in a foreign port,
but later helped to work the ship home. The owners were entitled to refuse payment for
this. They had not known that the captain was still willing to work, and they had neither
accepted nor rejected his services.

Duration of the offer.


An offer does not continue indefinitely. While the offerer may be
content at the moment to deal on terms of the offer, circumstances may
change. Once an offer has come to an end, it can no longer be accepted. It
can end in the following ways:
1. It is possible for the offerer to revoke or withdraw his offer at any time
up to acceptance. He is entitled to do this even if he has promised to keep
the offer open for a specified time, unless the offeree had paid a sum of
money or given some other consideration in return for such a promise
(sometimes known as 'buying an option'). Even then, the offer can be
withdrawn before the agreed time, but withdrawal will be a breach of this
subsidiary contract to keep open the negotiations.

In Routledge v. Grant (1828), Grant offered to buy Routledge's house, and gave him six
weeks to decide whether to accept his offer. Before six weeks had elapsed, Grant
withdrew his offer. He was held entitled to do so at any time before acceptance.

Revocation is only effective if it is communicated to the offeree, either by


express words or by conduct which shows a clear intention to revoke.
Selling the goods elsewhere would be an example of such conduct, but this
49

will only revoke the offer when the first prospective buyer learns of the
sale. Communication can be by the seller himself, or by another reliable
source.

In Dickinson v. Dodds (1876), the defendant had offered to sell a house to the claimant.
Before the claimant accepted, the defendant sold the house to someone else. The
claimant learned of this from a friend, Berry. It was held that, since the claimant had
heard of the revocation from a reliable source, the original offer to him was revoked,
and he could not now accept it. (On the other hand, a mere rumour would be much less
likely to amount to reliable communication of revocation.)

2. An offer will lapse if the offeror imposes a time limit for acceptance, and
the other party does not accept within that time. If no express time limit is
imposed, the offer will lapse after a reasonable time. What is reasonable
will depend on all the circumstances.

In Ramsgate Victoria Hotel Co. v. Montefiore (1866), an investor offered in June to buy
shares in the claimant company. He heard nothing until November, by which time he no
longer wanted the shares. It was held that it was now too late for the company to accept
his offer.

3. The death of either party before acceptance will normally terminate the
offer, certainly from the moment when the other party learns of the death
and, when the identity of the other party is vital, from the time of death.
4. Once the offeree has rejected an offer he cannot later go back and
purport to accept it. A counter-offer will operate as a rejection.

In Hyde v. Wrench (1840), an offer was made to sell a farm for £1000. A counter-offer
of £950 was made and refused, whereupon the buyer tried to accept the original offer of
£1000. It was held that the seller could refuse this, because the original offer had been
rejected.
50

Acceptance subject to conditions will also be a rejection, because the


offeree is trying to introduce new terms into the bargain.

In Neale v. Merrett (1930), the defendant offered to sell land to the claimant for £280
The claimant 'accepted' this offer, sent a cheque for £80, and promised to pay the rest by
instalments of £50. It was held that there was no contract; the purported acceptance
introduced credit terms which the seller did not want.

However, a mere request for further information is not a rejection.

In Stevenson v. McLean (1880), a prospective buyer asked whether the seller would be
prepared to give more time for performance. This was an enquiry, not a rejection.

Rejection, like offer and revocation, must be communicated, and is only


effective from the moment when the offeree learns of it. If, therefore, the
offeree sends a letter of rejection, but then changes his mind and telephones
acceptance before the rejection arrives, there will be a valid contract.
5. An offer may be conditional upon other circumstances. If the conditions
are not fulfilled, the offer will lapse. The conditions may be express or
implied.

In Financings Ltd v. Stimson (1962), a customer offered to take a car on hire-purchase


from Financings Ltd. Before the offer was accepted, the car was stolen from the dealer's
garage where it was being kept, and badly damaged. Unaware of this, Financings Ltd
purported to accept the offer. It was held that the company could no longer do so. The
customer's offer was subject to the implied condition that the car remain in substantially
the same state between offer and acceptance.

6. Acceptance, by completing the contract, will bring the offer to an end. If


an offer, capable of acceptance by only one person, is made to a group of
people and one accepts, the offer ceases to exist so far as the rest of the
group is concerned.
51

Exercises on the text.


Task 1. Read the text and translate it into Russian.
Task 2. Study the following legal terms ant their definitions, supply
corresponding Russian terms, use them in situations of your own.
1. withdrawal, n. 1. The act of taking back or away; removal
<withdrawal of consent>. 2. The act of retreating from a place, position, or
situation <withdrawal from the moot-court competition>. 3. The removal of
money from a depository <withdrawal of funds from the checking
account>. – withdraw, vb.
2. sanction, n. 1. Official approval or authorisation. 2. A penalty or
coercive measure that results from failure to comply with a law, rule, or
order <a sanction for discovery abuse>.
3. acceptance, n. 1. An agreement, either by express act or by
implication from conduct, to the terms of an offer so that a binding contract
is formed.  If an acceptance modifies the terms or adds new ones, it
generally operates as a counteroffer. 2. A buyer’s assent that the goods are
to be taken in performance of a contract for sale.  Under UCC a buyer’s
acceptance consists in (1) signifying to the seller that the goods are
conforming ones or that the buyer will take them despite nonconformities,
(2) not making an effective rejection, or (3) taking any action inconsistent
with the seller’s ownership. If the contract is for the sale of goods that are
not identified when the contract is entered into, there is no acceptance until
the buyer has had reasonable time to examine the goods. But if the buyer
deals with them as owner, as by reselling them, a court my find
constructive acceptance. 3. The formal receipt of and agreement to pay a
negotiable instrument. 4. A negotiable instrument, esp. a bill of exchange,
that has been accepted for payment. 5. An insurer’s agreement to issue a
policy of insurance.
conditional acceptance. An agreement to pay a draft on the occurrence or
52

nonoccurrence of a particular event.


4. offer, n. 1. The act or an instance of presenting something for
acceptance <the prosecutor’s offer of immunity>. 2. A promise to do or
refrain from doing some specified thing in the future; a display of
willingness to enter into a contract on specified terms, made in a way that
would lead a reasonable person to understand that an acceptance, having
been sought, will result in a binding contract. 3. A price at which one is
ready to buy or sell; BID <she lowered her offer to $200>. 4. Attempt <an
offer to commit battery>. – offer, vb. – offeror, n. – offeree, n.
offer to all the world. An offer, by way of advertisement, of a reward for
the rendering of specified services, addressed to the public at large.  As
soon as someone renders the services, a contract is made.
public-exchange offer. A takeover attempt in which the bidder corporation
offers to exchange some of its securities for a specified number of the
target corporation’s voting shares.
5. undertaking, n. 1. A promise, pledge, or engagement. 2. A bail bond.
6. tender, n. 1. An unconditional offer of money or performance to satisfy a
debt or obligation <a tender of delivery>.  The tender may save the
tendering party from a penalty for nonpayment or nonperformance or may,
if the other party unjustifiably refuses the tender, place the other party in
default. 2. Something unconditionally offered to satisfy a debt or
obligation. 3. Contracts. Attempted performance that is frustrated by the
act of the party for whose benefit it is to take place.  The performance may
take the form of either a tender of goods or a tender of payment. Although
this sense is quite similar to sense 1, it differs in making the other party’s
refusal part of the definition itself. 4. An offer or bid put forward for
acceptance <a tender for the construction contract>. 5. Something that
serves as a means of payment, such as coin, banknotes, or other circulating
medium; money <legal tender>. – tender, vb.
tender of delivery. A seller’s putting and holding confirming goods at the
53

buyer’s disposition and giving the buyer any notification reasonably


necessary to take delivery.  The manner, time, and place for tender are
determined by the agreement and by Article 2 of the Uniform Commercial
Code.
7. apply, vb. 1. To make a formal request or motion <apply for injunctive
relief>. 2. To employ for a limited purpose <Apply the payments to a
reduction in interest>. 3. To put to use with a particular subject matter
<apply the law to the facts> <apply the law only to transactions in
interstate commerce>.
8. reasonable person. 1. A hypothetical person used as a legal standard,
esp. to determine whether someone acted with negligence.  The
reasonable person acts sensibly, does things without serious delay, and
takes proper but not excessive precautions. – Also termed reasonable man;
prudent person; ordinarily prudent person. 2. Archaic. A human being.
9. duration, n. 1. The length of time something lasts <the duration of the
lawsuit>. 2. A length of time; a continuance in time <an hour’s duration>.
10. revocation, n. 1. An annulment, cancellation, or reversal, usu. of an
actor power. 2. Contracts. Withdrawal of an offer by the offeror. 3. Wills &
estates. Invalidation of a will by the testator, either by destroying the will
or by executing a new one. – revoke, vb.
11. option, n. 1. The right or power to choose; something that may be
chosen. 2. A contract made to keep an offer open for a specified period, so
that the offeror cannot revoke the offer during that period. – Also termed
option contract. 3. The right conveyed by such a contract. 4. The right (but
not the obligation) to buy or sell a given quantity of securities,
commodities, or other assets at a fixed price within a specified time
<trading stock options is a speculative business>.
12. source, n. The originator or primary agent of an act, circumstance, or
result.
13. limit, n. 1. A restriction or restraint. 2. A boundary or defining line. 3.
54

The extent of power, right, or authority. – limit, vb. – limited, adj.


14. lapse, n. 1. The termination of a right or privilege because of a failure
to exercise it within some time limit or because a contingency has occurred
or not occurred. 2. Wills & estates. The failure of testamentary gift, esp.
when the beneficiary dies before the testator dies.
15. lapse, vb. 1. (Of an estate or right) to pass away or revert to someone
else because conditions have not been fulfilled or because a person entitled
to possession has failed in some duty. 2. (Of a devise, grant, etc.) to become
void.
16. purport, n. The idea or meaning that is conveyed or expressed, esp.
by a formal document.
17. purport, vb. To profess or claim falsely; to seem to be.
18. counteroffer, n. Contracts. An offeree’s new offer that varies the
terms of the original offer and that therefore rejects the original offer. –
counteroffer, vb. – counterofferor, n.
19. rejection, n. 1. A refusal to accept a contractual offer. 2. A refusal to
accept tendered goods as contractual performance.  Under the UCC, a
buyer’s rejection of nonperforming goods must be made within a
reasonable time after tender or delivery, and notice of the rejection must be
given to the seller. – reject, vb.
20. condition, n. 1. A future and uncertain event on which the existence
or extent of an obligation or liability depends; an uncertain act or event that
triggers or negates a duty to render a promised performance.  For
example, if Jones promises to pay Smith $500 for repairing a car, Smith’s
failure to repair the car (a condition) relieves Jones of the promise to pay.
2. A stipulation or prerequisite in a contract, will, or other instrument,
constituting the essence of the instrument.  If a court construes a
contractual term to be a condition, then its untruth or breach will entitle the
party to whom it is made to be discharged from all liabilities under the
contract. 3. Loosely, a term, provision, or clause in a contract.
55

express condition. A condition that is explicitly stated in an instrument;


esp., a contractual condition that the parties have reduced to writing.
implied condition. A condition that is not expressly mentioned, but is
imputed by law from the nature of the transaction or the conduct of the
parties to have been tacitly understood between them as a part of the
agreement.
21. cease, vb. 1. To stop, forfeit, suspend, or bring to an end. 2. To
become extinct; to pass away. – cessation, n.

Notes.
reject. In contract law, this is the verb ordinarily used to describe what an
offeree does in turning down an offer, or a buyer in refusing tendered goods.
repudiation; rescission. Repudiation = contracting party’s words or actions
that indicate an intention not to perform the contract in the future. Rescission
= a party’s unilateral unmaking of a contract for a legally sufficient re
reason, such as the other party’s material breach.
Though the definitions suggest precise meanings for these terms, they are
frequently confused. The main problem is that repudiation is a common-law
term, whereas rescission is an equitable one. Thus, as P.S. Atiyah points out,
“most books on the law of Contracts discuss the right to repudiate the
contract for breach of condition in a section on Remedies, while they treat of
the right to rescind a contract in the section on Misrepresentation. Indeed, so
different are repudiation and rescission believed to be, that serious confusion
is caused in the law of sale of goods by the fact that the Sale of Goods Act
regulates the former but not the latter.” To compound the trouble, lawyers
indiscriminately use repudiation for both a rightful and wrongful
termination.
revoke; retract. These two words are nearly synonyms. Revoke = to annul
by taking back; retract = to withdraw or disavow. In the idiom of contract
law, an offer is revoked, while an anticipatory repudiation of a contract is
56

retracted.

Task 3. Answer the following questions.


1. What is the difference between the situation where negotiations are in
process and the situation where a binding agreement has been reached?
2. What is an offer?
3. Who is an offer directed to?
4. Why is a mere invitation to treat not an offer? Give examples to illustrate
your point of view.
5. Is a mere boast an offer? Why (not)? In what case it can be considered an
offer?
6. Can a declaration of intention form a basis of a contract?
7. What can you say about “giving information”?
8. Why is it said that “an offer must be communicated to the other party”?
how does it work?
9. What rules concern duration of the offer?
10. How can an offer end?
11. In what case is revocation effective?
12. How can a time limit influence the acceptance?
13. Will the offer continue to exist in case of the death of either party?
14. Can the offeree accept an offer if he has rejected it once? Give examples.
16. What rules concern rejection?
17. In what case an offer is conditional? Give examples.
18. What else can bring the offer to an end?

Task 4. Fill in the appropriate legal term.


option (3) ∙ condition ∙ purports ∙ source (2) ∙ applied ∙ offer ∙
sanction
1. The committee gave … to the proposal. 2. She accepted the $750 … on
the Victorian armoire. 3. When Jane decided to buy a house she … to her
bank for a loan. 4. The lawyer was running out of … for settlement. 5. The
57

… is valid because it is supported by consideration. 6. Phil declined his first


… to buy the house. 7. She was the … of the information. 8. The side
business was the … of income. 9. The document … to be a will, but it is
neither signed nor dated. 10. The word ‘…’ is used in the law of property as
well as in the law of contract and it is sometimes used in a very loose sense
as synonymous with ‘term’, ‘provision’, or ‘clause’. In such a sense it
performs no useful service.

Task 5. Translate into Russian.


1. Without adequate sanctions the procedure for discovery would often
be ineffectual. Under Rule 37 [of the Federal Rules of Civil Procedure], …
any party or person who seeks to evade or thwart full and candid discovery
incurs the risk of serious consequences, which may involve imprisonment
for contempt of court, an order refusing the delinquent party the right to
support or oppose designated claims or defenses, striking out pleadings or
parts of pleadings, rendering judgement by default, dismissal of the action or
a claim therein, or assessment of expenses an attorney’s fees. Sanctions are
intended to prompt a party to respond. 2. Acceptance means communicated
acceptance. It must be something more than a mere mental assent. This use
of the word ‘communicated’ is open to some objection. To very many
persons the word means that knowledge has been received. Frequently a
contract is made even though the offeror has no such knowledge. In such
case the acceptance is not ‘communicated’ and yet it consummates the
contract. 3. A condition is an event, not certain to occur, which must occur,
unless its non-occurrence is excused, before performance under a contract
becomes due.

Task 6. Fill in the appropriate article.


1. Acceptance of … conveyance or of … document containing … promise is
a manifestation of assent to … terms thereof made, either before or after
58

delivery, in accordance with any requirements imposed by … grantor or


promisor. If … acceptance occurs before delivery and is not binding as …
option contract, it is revocable until the moment of delivery. 2. … offer is, in
effect, … promise by … offeror to do or abstain from doing something,
provided that … offeree will accept … offer and pay or promise to pay …
‘price’ of … offer. … price, of course, need not be … monetary one. In fact,
in bilateral contracts … mere promise of payment of … price suffices to
conclude … contract, while in … unilateral contract it is … actual payment
of … price which is required. 3. Where … criminal assault has been given
this dual scope, … definition in terms of ‘ … attempt or offer’ to commit …
battery is assumed to represent both grounds. … word ‘offer’ it is said,
signifies … threat that places … other in reasonable apprehension of
receiving … immediate battery. It would be … mistake, however, to assume
that … word carried any such significance when it first appeared in …
definition of this offense. In one of its meanings, ‘offer’ is … synonym of
‘attempt’. 4. … reasonable man connotes … person whose notions and
standards of behaviour and responsibility correspond with those generally
obtained among ordinary people in our society at … present time, who
seldom allows his emotions to overbear his reason and whose habits are
moderate and whose disposition is equable. He is not necessarily … same as
… average man – … term which implies … amalgamation of counter-
balancing extremes. 5. This term condition is generally used to describe any
fact, subsequent to the formation of … contract, which operates to make …
duty of … promisor immediately active and compelling. Such … fact may
be described as such in … term of the contract or it may not. In either event,
… term of … contract should not itself be called … condition. … It is not
uncommon, popularly, to speak of … condition of … contract as
synonymous with term or provision of … contract. This should be avoided.
59

Part 2
Acceptance
This must take place while the offer is still open. It must be an absolute and
unqualified acceptance of the offer, as it stands, with any terms that may be
attached. As we have seen, anything else will amount to rejection.
On occasions, an acceptance may be made subject to a written or formal
agreement. It is then a question of construction whether the parties intend to
be bound by the initial agreement, and the writing is only for the purpose of
recording this, or whether there is no intention to be bound until the more
formal agreement is made. In contracts for land, correspondence expressed
as being 'subject to contract' is not binding even if it incorporates all of the
terms and is signed by or on behalf of the parties.
Acceptance completes the contract, and the place where acceptance is
made is, therefore, the place of the contract. If negotiations take place
between parties in different countries, the rule may help to determine which
system of law applies.
The manner of acceptance
Acceptance may take the form of words, spoken or written, or it may be
implied by conduct, as where the offeree performs some specific act required
by the offerer. Mere mental assent is insufficient, nor is it possible in English
law to dispense with acceptance altogether. There must be some positive act
of acceptance, and mere silence will never be enough.

In Felthouse v. Bindley (1863), negotiations were taking place regarding the price of a
horse. The claimant eventually wrote, 'If I hear no more about him, I consider the horse
mine at £30 15s.' The defendant did not reply. It was held that, although he had intended
to accept and sell at this price, his silence could not constitute acceptance, and there was
therefore no sale.

Thus where unsolicited goods arrive through the post with a note saying that
60

unless they are returned within a specified time the recipient will be bound
to pay the price, this note can be safely ignored. So long as the recipient does
not treat the goods as his, by using or deliberately destroying them, his
silence will not amount to acceptance. Indeed, under the Unsolicited Goods
and Services Act 1971 as amended, the recipient will automatically become
owner of the goods as against the sender, unless the sender collects them
within 30 days. (Where the seller is a dealer, it can also be a criminal offence
for him to demand payment.)
Where two businesses contract, an interesting 'battle of forms' can
sometimes arise.

In Butler Machine Tool Co. Ltd v. Ex-Cell-O Corporation (England) Ltd (1979), the
claimant offered to sell tools to the defendant and sent a printed copy of the claimant's
standard terms. The defendant 'accepted' this offer, enclosing a copy of the defendant's
standard terms, which differed slightly from the claimant's. The claimant acknowledged
this acceptance by sending back a tear-off slip from the defendant's copy probably
without reading it. It was held that the defendant's 'acceptance' was really a counter-offer.
The claimant had accepted this counter-offer by sending back the tear-off slip and going
on to perform the contract. When a dispute later arose, the defendant’s terms were,
therefore, applied.

Communication of acceptance
As a general rule, acceptance must be communicated to the offerer. There is
no contract until the offerer knows that his offer has been accepted. The
acceptance must, moreover, be communicated by the offeree himself or his
authorized agent. Unlike revocation, acceptance cannot be communicated by
an unauthorized third party, however reliable.

In Powell v. Lee (1908), the claimant had applied for a post as headmaster. The school
managers decided to appoint him, and one of the managers, without authority, told him
this unofficially. Later, the managers changed their minds. It was held that they were free
to do so; there was no contract with Powell, because acceptance had not been commu-
61

nicated by the managers.

There are two main exceptions to the rule that acceptance is only
effective on communication:
1. The offerer may dispense with communication, and indicate that the
offeree should. if he wishes to accept, simply carry out his side of the
bargain without bothering to inform the offerer. Thus if a customer wrote
ordering fuel and, without further communication, the fuel was delivered in
accordance with the order, the delivery would be acceptance of the offer to
buy.

In Carlill v. Carbolic Smoke Ball Co. (1893), another defence raised was that Mrs Carlill
had not communicated to the company that she intended to use the smoke ball and catch
influenza. This defence also failed; the nature of the offer made communication of
acceptance inappropriate.

In First Sport Ltd v. Barclay's Bank plc (1993), it was held that a 'cheque guarantee card',
by which the bank promised that its client's cheque up to £50 would be paid, was an offer
to the whole world. The retailer who allowed a customer to pay by cheque in reliance on
the card had accepted the bank's offer, and did not need to tell the bank when doing so.

2. Where the posting rule applies, a letter of acceptance, properly addressed


and stamped, is effective from the moment of posting, even if it never
arrives. Three points must be emphasized about the posting rule. In the first
place, the rule applies only where it must have been in the contemplation of
the parties that the post would be used as a means of communicating the
acceptance. This will not always be the case; if all the negotiations have
taken place by telephone, and the offerer clearly expects a reply by
telephone or fax, a letter of acceptance would not be effective until it
arrived. Similarly, the posting rule would not apply if the offerer made it
plain at the outset that he was only prepared to be bound when he knew of
the acceptance.
62

In Holwell Securities Ltd v. Hughes (1974), an offer to sell required that acceptance be
made 'by notice in writing to the intending vendor' within six months. Notice was posted
but never arrived. It was held that there was no contract. The words of the offer showed
that the offerer was not prepared to be bound until he received the written notice.

Secondly, there must obviously be some evidence of posting. It is not


enough to give the letter to some other person to post, or even to hand it to a
postman; it must be put into the hands of the postal authorities in the normal
way. Finally, the posting rule applies only to acceptance; an offer, or a letter
of revocation or rejection, will be effective only on arrival.

In Byrne v. Van Tienhoven (1880), a firm in Cardiff offered by letter to sell tin plate to a
firm in New York. Later, the firm sent another letter revoking this offer, but while this
was in transit and before its delivery, the New York firm posted a letter of acceptance. It
was held that the parties clearly intended the use of the post to communicate acceptance,
and posting the letter of acceptance, therefore, brought the contract into existence, since
this was done before the revocation arrived.

The posting rule applies to other non-instantaneous means of


communication, but not to the use of the phone, fax, or telex. In these latter
cases, the communication is virtually instantaneous and is inoperative unless
and until it reaches the other party.

In Entores v. Miles Far East Corporation (1955), an acceptance sent by telex from
Amsterdam to London was held to be effective only when it arrived in London, so that
the contract, being made in England, could be brought before the English courts.

Certainty of terms
Even where offer and acceptance are apparently complete, there may still be
no agreement. There can be no contract at all if it is not possible to say what
the parties have agreed upon because the terms are too uncertain. In
63

particular, this will be the case where the parties have still left essential
terms to be settled between them. They are still at the stage of negotiation,
and an agreement to agree in future is not a contract.

In Scammell v. Ouston (1941), Ouston agreed to take a van 'on the understanding that the
balance of the purchase price can be had on hire-purchase terms over a period of two
years'. It was held that this contract was void for uncertainty, because no one could say
what hire-purchase terms were envisaged.

In King's Motors (Oxford) Ltd v. Lax (1969), an option to renew a lease 'at such rental as
may be agreed upon between the parties' was similarly held void.

On the other hand, this rule is subject to some qualifications. Indeed the
courts have often made every effort to resolve the uncertainty.
1. The parties may be bound if the unsettled terms are only part of a larger
agreement, the rest of which is already being or has been performed, and
which is agreed to be binding. This is particularly so if there has been some
provision for arbitration to settle potential disputes.

In Foley v. Classigue Coaches Ltd (1934), a garage sold land to the bus company on
condition (inter alia) that the company buy all of its petrol from the garage 'at a price to
be agreed between the parties ... from time to time'. A later clause provided that any
dispute as to the subject-matter or content of the agreement should be referred to
arbitration. The land was conveyed, and the bus company duly bought its petrol for three
years, but then claimed that it need no longer do so. It was held bound. A reasonable price
could be settled under the arbitration clause.

In Sudbrook Trading Estate Ltd v. Eggleton (1982), the claimant was tenant of some land,
but had the right to buy it before his lease expired. The price was to be fixed b) two
arbitrators, one appointed by the landlord, the other by the tenant. The landlord refused to
appoint an arbitrator. The House of Lords held that since the parties had clearly intended
to be bound at the outset, and were already performing the lease, the court would make
alternative arrangements to settle the sale price, and would order the transfer.
64

2. If the parties have agreed criteria according to which the price can be
calculated, or have had previous dealings similar to the present transaction,
the courts can use these matters to ascertain the terms of the contract.

In Hillas & Co. Ltd v. Areas Ltd (1932), an option to buy 100000 standards of softwood
goods in 1931, without mention of detailed terms, was held binding because it was
assumed to be on terms similar to those agreed in previous dealings between the parties.

In Brown v. Gould (1972), an option was given to renew a lease 'at a rent to be fixed
having regard to the market value of the premises at the time of exercising this option
taking into account... structural improvement made by the Tenant...'. This was held
binding, because the court could, if necessary, discover the market price and the value of
the improvements from independent valuers.

3. If only a fairly minor term is meaningless, it may simply be ignored, and


the rest of the contract treated as binding.

In Nicolene Ltd v. Simmonds (1953), the defendant agreed to sell 3000 tons of steel bars
at £45 per ton, and added that he assumed that 'the usual conditions of acceptance apply'.
There were no usual conditions. The court held that he was bound; the rest of the
agreement made good sense, and the meaningless phrase could, therefore, be ignored.

Note that in most of the above cases a well drafted arbitration and/or
valuation clause could have prevented the expensive court proceedings.
If there is doubt about the meaning of any written term in a consumer
contract, the Unfair Terms in Consumer Contracts Regulations 1999 simply
provide that the interpretation most favourable to the consumer shall apply.

Task 1. Read the text and translate it into Russian.


Task 2. Study the following legal terms ant their definitions, supply
corresponding Russian terms, use them in situations of your own.
65

1. absolute, adj. 1. Free from restriction, qualification, or condition


<absolute ownership>. 2. Conclusive and not liable to revision
<absolute delivery>. 3. Unrestrained in the exercise of governmental
power <absolute monarchy>.
2. qualified acceptance. A conditional or partial acceptance that varies
the original terms of an offer and operates as a counteroffer; esp.; in
negotiable instruments, an acceptor’s variation of the terms of the
instrument.
3. incorporate, vb. 1. To form a legal corporation. 2. To combine with
something else <incorporate the exhibits into the agreement>. 3. To
make the terms of another (esp. earlier) document part of a document
by specific reference; esp., to apply the provisions of the Bill of
Rights to the states by interpreting the 14th Amendment’s Due Process
Clause as encompassing those provisions.
4. assent, n. Agreement, approval, or permission. – assent, vb.
5. constructive assent. Assent imputed to someone based on contract.
6. express assent. Assent that is clearly and unmistakably
communicated.
7. implied assent. Assent inferred from one’s conduct rather than from
direct expression.
8. dispensation, n. An exemption from a law, duty, or penalty;
permission to do something that is ordinarily forbidden.
9. goods, n. 1. Tangible or movable personal property other than money;
esp., articles of trade or items of merchandise <goods and services>. 
The sale of goods is governed by Article 2 of the UCC. 2. Things that
have value, whether tangible or not.
10.dealer, n. 1. A person who purchases goods or property for sale to
others; a retailer. 2. A person or firm that buys and sells securities for
its own account as a principal, and then sells to a customer.
11.communication, n. 1. The expression or exchange of information by
66

speech, writing, or gestures. 2. The information so expressed or


exchanged.
12.retailer, n. A person or entity engaged in the business of selling
personal property to the public or to customers, as opposed to selling
to those who intend to resell the items.
13.vendor, n. A seller, usu. of real property. – Also termed venditor.
14.renewal, n. 1. The act of restoring or re-establishing. 2. The re-
creation of a legal relationship or the replacement of an old contract
with a new contract, as opposed to the mere extension of a previous
relationship or contract. – renew, vb.
15.rental, n. 1. The amount received as rent. 2. The income received
from rent. 3. A record of payments received from rent. – rental, adj.
16.qualification, n. 1. The possession of qualities or properties (such as
fitness or capacity) inherently or legally necessary to make one
eligible for a position or office, or to perform a public duty or
function. 2. A modification or limitation of terms or language; esp., a
restriction of terms that would otherwise be interpreted broadly. –
qualify, vb.
17.qualified, adj. 1. Possessing the necessary qualifications; capable or
competent <a qualified medical examiner>. 2. Limited; restricted
<qualified immunity>.
18.inter alia, adv. [Latin] Among other things.
19.tenant, n. 1. One who holds or possesses lands or tenements by any
kind of right or title. 2. One who pays rent for the temporary use and
occupation of another’s land under a lease or similar arrangement.
20.expiration, n. A coming to an end; esp., a formal termination on a
closing date. <expiration of the insurance policy>. – expire, vb.
21.arbitrator, n. A neutral person who resolves disputed between parties,
esp. by means of formal arbitration.
67

Task 3. Answer the following questions.


1. What are the main characteristics of acceptance?
2. Should acceptance be made in written form?
3. What rules apply to contracts dealing with unsolicited goods?
4. What can you say about communication of acceptance?
5. Are there any exceptions to the rule, that acceptance is only effective
on communication? Give examples.
6. Is the way the posting rule applies to acceptance similar to its
application to an offer?
7. Does the posting rule apply to all means of communication? Why
(not)? Give examples.
8. Is it enough to complete an offer and acceptance to have agreement?
why (not)?
9. What do the courts do to resolve the uncertainty? Give examples.

Task 4. Fill in the appropriate legal term.


qualification (2) · incorporated (2) · goods
1. She … the family business. 2. The codicil … the terms of the will. 3. The
importance of social … varies from society to society. 4. Voter … requires
one to meet residency, age, and registration requirements. 5. The contract
contained a … requiring the lessor’s permission before exercising the right
to sublet.

Task 5. Translate into Russian.


1. ‘Goods’ means all things, including specially manufactures goods, that are
movable at the time of identification to a contract for sale and future goods.
The term includes the unborn young of animals, growing crops, and other
identified things to be severed from real property. … The term does not
include money in which the price is to be paid, the subject matter of foreign
exchange transactions, documents, letters of credit, letter-of-credit rights,
68

instruments, investment property, accounts, chattel paper, deposit accounts,


or general intangibles. 2. Acceptance completes the contract, and the place
where acceptance is made is, therefore, the place of the contract. 3. … unless
they are returned within a specified time the recipient will be bound to pay
the price… 4. Acceptance is only effective on communication. 5. Unlike
revocation, acceptance cannot be communicated by an unauthorized third
party, however reliable. 6. … the rule applies only where it must have been
in the contemplation of the parties that the post would be used as a means of
communicating the acceptance. 7. The posting rule applies only to
acceptance; an offer, or a letter of revocation or rejection, will be effective
only on arrival. 8. Ouston agreed to take a van ‘on the understanding that the
balance of the purchase price can be had on hire-purchase terms over a
period of two years’. It was held that this contract was void for uncertainty.
9. The land was conveyed, and the bus company duly bought its petrol for
three years, but then claimed that it need no longer do so. It was held bound.
A reasonable price could be settled under the arbitration clause.

Task 6. Put in the appropriate article.


1. And in some instances, … insurance companies have even specified in …
application forms that acceptance of … applicant’s offer will not occur until
… insurance policy is literally delivered to … applicant – that is, … insurer
chooses to structure … arrangement so that acceptance is to be manifested
by … physical delivery of … insurance policy to … applicant. 2. …
requirement of ‘assent’, which is fundamental to … formation of … binding
contract, implies in … general way that both parties to … exchange shall
have … reasonably clear conception of what they are getting and what they
are giving up.

Test your professional English.


Task 1. Match the type of contract with its description.
69

1.Consultancy agreement a. This agreement is used to ensure the repayment


of money borrowed, usually in monthly
instalments.
2. Distribution b. This agreement is used where one party buys
agreement goods from the manufacturer and re-sells them on
his own account. He will however be given the
right to use the manufacturer's intellectual
property rights.

c. This agreement sets out the terms and


3. Franchise agreement conditions on which a business supplies goods.

d. This agreement is used where one party grants


4. Loan agreement to another the right to run a business in the
name of the first party. Examples include Body
Shop and McDonalds.

e. This is the equivalent of a contract of


5. Manufacturing employment for directors.
licence
agreement

6. Terms and conditions f. This agreement is used where one party is


of sale agreement providing services as an independent advisor to a
company.
g. This agreement should be used where one
7. Contract of party (the licensor) owns intellectual property
employment rights in respect of a product it has developed
and wishes to license the manufacture of the
product to a third party.

h. This is intended to govern the relationship


8. Directors' service between a number of shareholders in a company.
agreement The agreement works as a second layer of
protection preventing the company from being
run in a manner other than has been agreed.

i. This contract comes into existence as soon as a


9. Shareholders' job offer is accepted whether that offer is oral or
agreement in writing

Task 2. Many Latin expressions are used in British law, for example
corpus delicti is the proof that a crime has been committed. Match
words from the two boxes, A and B, to make 15 legal expressions
which fit the definitions in the list. Each expression should consist of a
word from Box A followed by a word from Box B. The first one has
been done for you as an example.

A • caveat • compos • doli • habeas • inter • inter


ipso • obiter • per • prima • sui • toties • vice •
70

viva ∙ bona

B. alia • capax • capita • corpus • dicta • emptor • facie


• facto fide • generis • mentis • quoties • versa • vivos
• voce

Definition Answer

In good faith

Among other things.

The buyer is responsible for


checking a purchase

Things which are said in


passing

In the opposite way

By speaking

Sane

In a class of its own

As often as necessary

Between living people

A legal remedy against


wrongful imprisonment

By this fact, in itself

Capable of crime

For each person

As things seem at first


71

Task 3. The italicised words in the sentences in Column A are all nouns.
What are the adjective forms? Complete the sentences in Column В
using the correct adjective forms.
1. The company was declared to The company was declared to
be in a state insolvency be …
2. The jury returned a verdict of The jury found the accused
not guilty by reason of insanity.
to be … and not guilty
3. He admitted his guilt He admitted he was …
4. His incompetence to sign the It was pointed out that he was
contract was pointed out.
… to sign the contract
5. There is no responsibility on The company is not … for
the company's part for loss of loss of customers’ property
customers' property.
6. The police found the youth to The police found the youth to
be in a state of intoxification be …
7. The solicitor confirmed the The solicitor confirmed that
fitness of her client to plead her client was
…to plead
8. Non profit-making Non profit-making
organizations can claim tax organizations are …from tax
exemption.

9. There is doubt about the There is doubt about whether


legality of the company's action the company's action in
in dismissing him. dismissing him is
completely
10. The court doubted the The court doubted whether
legitimacy of his claim his claim was

Task 4. In Column A of this table there are 20 nouns relating to legal


matters. For each of the nouns decide whether the correct plural form is
in Column B or Column C.
Column A Column B Column C
referendum referendums referenda
preservation preservation preservation
72

order order orders


bureau bureaus bureaux
criterion criteria criterions
policewoman policewomans policewomen
misdemeanour misdemeanours misdemeanoures
corpus corpora corpuses
notary public notary publics notaries public
memorandum memoranda memorandums
juryman jurymen jurymans
rejoinder rejoinders rejoinderi
moratorium moratoriums moratoria
appendix appendixes appendices
injunction injunctions injuncta
provision provisiones provisions
corrigendum corrigenda corrigendums
president-elect presidents-elect president-elects
LJ LJJ LJs
quango quangi quangos
dictum dicta dictums

Task 5. Sometimes two words can be spelled the same but pronounce
differently. This is often because one word is a noun and the other is a
verb. Read the following sentences. Decide in each case if the word in
italics is a verb or a noun. Then decide which stress pattern it has.
1. France, Spain, Greece and Italy export olive oil. (N/V)
2. Manufactured goods are Japan’s principal export. (N/V)
3. The main suspect in the murder investigation is the husband. (N/V)
4. We suspect that the robbery was carried out by someone inside the
company. (N/V)
5. Great news: they have offered us the contract. (N/V)
6. We’re going to contract a company called All Clear to deal with
security. (N/V)
7. Given the evidence, I’m sure they’ll convict him. (N/V)
8. He wrote to you from prison – you must have known he was a convict.
(N/V)
9. I’m sorry, you can’t park here without a permit. (N/V)
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10.This document will permit you to sell computer system abroad. (N/V)
11.It’s important to record everything the prisoner says during
interrogation. (N/V)
12.We keep a record of sales from day to day on the computer. (N/V)
13.The object of our meeting today is to discuss the damages claim by
Mr Larsen. (N/V)
14.I’m told that you object to one of the clauses in the agreement.
15.With your permission, I would like to read you an extract from the
statement. (N/V)
16.Can you go through the accounts and extract the information he’s
asking for? (N/V)
17.The two companies will conduct negotiations which may lead to a
merger. (N/V)
18.She divorced him because of his unreasonable conduct. (N/V)
19.I don’t dispute your claim to the estate. (N/V)
20.I believe there is a dispute between my client and yours. (N/V)

Task 6. Render into English.

Договором определяется объем прав и обязанностей участников


гражданских правоотношений, порядок и условия исполнения
обязательств, ответственность за их неисполнение или же
ненадлежащее исполнение.
Содержание договора – совокупность действий, которые стороны
обязались совершить (не совершить).
Закон регулирует только основные, наиболее распространенные виды
договоров.
Стороны же могут заключать сделки, в которых содержатся элементы
различных видов договоров, как предусмотренные, так и не
предусмотренные законом.
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Договор вступает в силу с момента его заключения, действует до


определенного в нем момента окончания исполнения сторонами
обязательства. Окончание срока действия договора не влечет
прекращения договорных обязательств, кроме случаев прямого
указания на это в законе или договоре.
Договор заключается посредством направления оферты одной из
сторон и ее акцепта другой.
Оферта – адресованное одному или нескольким конкретным лицам
предложение заключить договор. Оферта должна содержать
существенные условия договора. Оферта связывает направившее ее
лицо с момента ее получения адресатом.
Оферта публичная – содержащее все существенные условия договора
предложение, из которого усматривается воля лица, делающего
предложение, заключить договор на указанных в оферте условиях с
любым, кто отзовется.
Акцепт – ответ лица, которому адресована оферта, о ее полном и
безоговорочном принятии.

Task 7. Discuss the following:


1. (a) Explain and illustrate the distinction between an offer and an invitation
to make an offer in the formation of a contract.
(b) Brenda visits a self-service store and selects several articles which she
places in the wire basket provided. She then changes her mind about some of
these articles and replaces them on the shelves. The manager of the store
claims that she has purchased the goods by placing them in the basket and
that she must pay for them. Advise Brenda.
2. Outline the legal position of the parties and the principles of law involved
in the following circumstances:
(a) A offers to sell a lorry to В who states that he will accept the offer if A
will undertake to pay for any repairs that may be necessary during the next
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three months. A refuses this condition. В then states that he will buy the
lorry without insisting upon this requirement, but A replies to the effect that
he no longer wishes to sell.
(b) С offers to sell a van to D and states that he will give D a week to decide
whether or not he wishes to buy. After three days, D is informed by X that С
has sold the van to E. D writes to С accepting his offer.
3. (a) When may a contract be formed without the acceptance of the offer
being
specifically communicated to the offerer?
(b) Williams, a wholesaler, offered to sell a consignment of cheap tinned
fruit to Roger, a retailer. Roger intended to accept this offer, but forgot to
inform Williams. Roger did, however, arrange for the printing of leaflets
advertising the sale of this fruit in his shop. Williams saw one of the leaflets
when he happened to visit the printer. Williams now believes that he can
obtain a better price for the fruit and has written to Roger withdrawing his
offer. Advise Roger.
4. (a) Outline the rules applicable to the formation of contracts made by
letters through the post. Do these rules apply equally to contracts made by
telephone and e-mail?
(b) Martin telephones Nigel and offers to sell him a lorry. Nigel accepts the
offer but Martin does not hear because of a bad line. Nigel changes his mind
and writes to Martin saying that he does not wish to buy the lorry. Advise
Martin.
5. (a) While a contract will not normally be valid if the terms are uncertain,
it may still be possible to leave some of the terms to be decided at a later
date. When may this be done?
(b) A supermarket contracted to buy the meat it required during 2002 from
Henry at the then prevailing price. A clause in the contract gave the
supermarket the option to extend the contract to cover its requirements for
meat in 2003 but no mention was made of the price or any other terms.
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The supermarket now seeks to exercise this option but Henry wishes to sell
his meat elsewhere.
Advise Henry as to whether or not he is bound by this option.
6. Explain, with reasons, whether a valid contract has been formed between
Sidney and Brian in each of the following situations: (a) Sidney agrees to
sell goods to Brian 'on the usual terms'.
(b) Sidney offers to sell goods to Brian for £500. Brian says he will pay £400
but Sidney refuses to reduce the price. Brian then says he will pay £500.
(c) Sidney offers to sell goods to Brian and gives him 10 days to decide
whether he wishes to buy them. After five days Sidney sells the goods
elsewhere. Two days later, Brian says that he accepts the offer.

Unit 3. Matters that Affect the Validity of Contracts

Part 1.

Some contracts that appear perfectly valid may nevertheless be wholly or


partly ineffective because of some defect when they were formed. The
vitiating factors discussed in this unit are mistake, misrepresentation, duress,
undue influence, and lack of capacity in the formation of the contract.
Mistake
The general rule is that mistake does not affect the validity of a contract. For
example, if a man is mistaken as to the nature or value of what he buys, this
is simply his misfortune. The law will not help him unless he has been
misled by the other party (see Misrepresentation).

In Leaf v. International Galleries (1950), a picture was sold which both seller and buyer
believed to be by Constable. In fact it was not. The contract was not affected by this
mistake, because each side intended to deal with the physical thing sold; they were
simply mistaken as to its quality and value.

A further preliminary point is that mistake of law will never affect the
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validity of a contract. Ignorance of the law is no defence. In certain


circumstances, mistake of fact may affect the contract and, if sufficiently
serious, render the contract void.
Mistakes of fact which render a contract void
1. Mistakes concerning the subject-matter of the contract, for example the
property sold, can render the contract void if sufficiently serious. A mere
mistake as to the nature or value of the subject-matter will not be enough
(see above).
A mutual mistake as to the identity of the subject-matter will render the
contract void. A mutual mistake will occur where the parties are, unknown to
each other, thinking about different things. Neither is right, neither wrong;
they are simply at cross purposes, and have never really agreed.
In Raffles v. Wichelhaus (1864), a cargo of cotton was described as being on the SS
Peerless from Bombay. There were in fact two ships of that name sailing from Bombay
with an interval of three months between them. The seller intended to put the cargo on the
second ship, while the buyer expected it on the first. The contract was held void.

A fundamental common mistake about the subject-matter may,


exceptionally, also render the contract void. A common mistake occurs
where both parties are under the same misapprehension: both are wrong. The
clearest instance of this is where, unknown to both parties, the subject-matter
does not exist.

In Associated Japanese Bank Ltd v. Credit du Nord S.A. (1988), Mr В fraudulently 'sold'
some machinery to Associated Japanese Bank ('AJB') and leased it back. Credit du Nord
('CZW) contracted with AJB to guarantee that Mr В would pay the rent. In fact, unknown
to both AJB and CDN, there was no machinery. The contract of guarantee was held void
for common mistake.

In Couturier v. Hastie (1856), the action was based on a contract to sell a cargo of wheat
which, unknown to both seller and buyer, no longer existed. The action failed.
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Similarly, in Galloway v. Galloway (1914), a separation agreement between 'husband' and


'wife', disposing of property between them, was held void when it was discovered that
they had never legally been married.

In Bell v. Lever Brothers Ltd (1932), however, the common mistake was not sufficiently
fundamental. Agreements to make large severance payments to senior employees who
were losing their jobs were made on the assumption by all parties that the men were
entitled to some payment. In fact, they could have been sacked for misconduct and
without compensation. Nevertheless the compensation agreements were held valid. The
mistake only affected the value of the old contracts of employment.

2. Mistaken signing of written documents may, exceptionally, be a nullity.


Three elements must be present if the contract is to be void: the signing must
have been fraudulently induced, the mistake must be fundamental, and the
signer must prove that he or she has not been negligent. A person attempting
to avoid liability under a contract on these grounds is said to plead non est
factum (it is not my act).

In Foster v. Mackinnon (1869), a rogue induced Mackinnon, an old gentleman with weak
sight, to sign a document which Mackinnon thought to be a guarantee. In fact he was
indorsing a bill of exchange for £3000 thereby incurring personal liability for this
amount. It was held that, so long as he had not been negligent, he was not liable on the
bill.

Conversely, in Sounders v. Anglia Building Society (1971), a Mrs Gallic intended to


assign the lease of her house so as to enable her nephew to borrow money. The
assignment was prepared fraudulently by a rogue, Lee, who had promised to arrange the
loan. The document which she signed transferred the lease to Lee himself, who
mortgaged it to the building society and departed with the proceeds. Mrs Gallie and her
nephew received nothing. Mrs Gallie claimed that the original assignment was void for
mistake; she had not read it because her glasses were broken, and she had not realized its
effect. Her plea failed. She had intended to assign her lease, and her mistake as to the way
in which she was assigning it was not so fundamental as to avoid the contract.
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3. A mistake by one party as to the identity of the other may sometimes


invalidate the contract. If A contracts with В under the impression that he is
really dealing with C, the contract will be void if A can prove that his
mistake was material; he intended to deal with С and would not have dealt
with anyone else. It may be exceptionally difficult for A to prove this,
particularly where the parties dealt with each other face to face.

In Phillips v. Brooks (1919), a rogue bought a ring in a jeweller's shop. He then persuaded
the jeweller that he was Sir George Bullough, and was, therefore, allowed to take away the
ring in return for a cheque. The cheque was dishonoured, and the ring was eventually
traced to a pawnbroker. The jeweller claimed that his contract with the rogue was void for
mistake, but his claim failed. The jeweller had dealt with the man facing him; the question
of identity was only raised when it came to payment.

Again, in Lewis v. Averay (1972), Lewis sold and parted with his car to a rogue who
pretended to be Richard Greene, the film actor. The rogue paid by cheque which was
dishonoured, and then re-sold the car to Averay. The contract between Lewis and the rogue
was not void; Lewis could not prove that he was willing to sell only to Richard Greene and
to no one else.

Where the parties did not deal with each other face to face, it may be easier
for A to prove that the mistake was material.

In Cundy v. Lindsay (1878), a rogue called Blenkarn ordered linen by post from Lindsay &
Co. by pretending to be Blenkiron, a reputable dealer. Blenkarn re-sold the linen to Cundy.
Lindsay & Co. were able to recover it (or its value) because the contract with Blenkarn was
void. They satisfied the court that they intended to deal only with Blenkiron.

In King's Norton Metal Co. Ltdv. Edridge, Merret & Co. Ltd (1897), on the other hand, the
claimants sold goods to a firm called 'Hallam & Co.' which placed an order by post.
Hallam & Co. turned out to be a complete fiction; the real buyer was a rogue called Wallis.
The contract was not void. If the claimants were willing to deal with an unknown
company, without checking, then the identity of the buyer was clearly not sufficiently
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material.

It will be apparent that most of the cases on mistake of identity are actions
between two innocent parties. A will have parted with the goods to a rogue,
who will have re-sold to X and departed with the proceeds. If the contract
between A and the rogue was void for mistake, A can recover the goods or
their value from X by an action for the tort of conversion; otherwise X will
normally be entitled to keep the property.

Other consequences of mistake


Where there is a mistake as to the subject-matter, but the mistake is not so
fundamental as to render the contract void, the court may nevertheless allow
one party the equitable remedy of rescission, that is, the right to have the
contract set aside if he so wishes. The party claiming this remedy must show
that he has not been at fault in any way, and the court may impose certain
conditions on granting the remedy.

In Cooper v. Phibbs (1867), Cooper agreed to lease a fishery from Phibbs. It later turned
out that, unknown to both, the fishery already belonged to Cooper. The court allowed
Cooper to rescind the lease, on condition that he compensate Phibbs for improvements
which the latter had made.

In Grist v. Bailey (1967), Grist contracted to buy Bailey’s house for $850. Both parties
believed that the house was occupied by a tenant protected under the Rent Acts. In fact,
unknown to both, the tenant had died. This increased the value of the house to about
$2250, and Bailey refused to carry out the contract, claiming that it was void for mistake.
The contract was held not void at common law, but the court exercised its equitable power
to set the original contract aside on condition that Bailey would now sell for the true value.

When an equitable remedy is claimed, mistake may exceptionally persuade


the court to refuse the remedy. For example, specific performance of a
contract may be refused if the defendant has made a mistake which renders it
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unfair and inequitable to enforce the agreement against him, as in Malins v.


Freeman (see below).
Where, by mistake, the terms of a written document do not represent
accurately what the parties agreed orally, the court may, at its discretion, order
the rectification of the document so that it does express what was agreed.

Exercises on the text.


Task 1. Read the text and translate it into Russian.
Task 2. Study the following legal terms and their definitions, supply
corresponding Russian terms, use them in situations of your own.
1. vitiate, vb. 1. To impair; to cause to have no force or effect. 2. To make
void or voidable; to invalidate either completely or in part <fraud
vitiates a contract>. 3. To corrupt morally. – vitiation, n. – vitiator,n.
2. factor, n. 1. An agent or cause that contributes to a particular result. 2.
An agent who is employed to sell properly for the principal and who
possesses or controls the property; a person who receives and sells
goods for a commission.  A factor differs from a broker because the
factor possesses or controls property. – Also termed commission
merchant; del credere bailiff. 3. One who buys accounts receivable at a
discount. 4. A garnishee.
3. defect, n. An imperfection or shortcoming, esp. in apart that is essential
to the operation or safety of a product. – defective, adj.
4. mistake, n. 1. An error, misconception, or misunderstanding; an
erroneous belief. 2. Contracts. The situation in which the parties to a
contract did not mean the same thing – or when one or both, while
meaning the same thing, formed untrue conclusions about the subject
matter of the contract – as a result of which the contract may be
rendered void.
5. mistake of fact. A mistake about a fact that is material to a transaction.
– Also termed error in fact; error of fact.
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6. mistake of law. A mistake about the legal effect of a known fact or


situation. – Also termed error in law; error of law.
7. mutual mistake. 1. A mistake in which each party misunderstands the
other’s intent. – Also termed bilateral mistake. 2. A mistake that is
shared an relied on by both parties to a contract.  A court will often
revise or nullify a contract based on a mutual mistake about a material
term. – Also termed (in sense 2) common mistake.
8. essential mistake. Contracts. A mistake serious enough that no real
consent could have existed, so that there was no real agreement.
9. nature, n. 1. A fundamental quality that distinguishes one ting from
another; the essence of something. 2. A wild condition, untouched by
civilization. 3. A disposition or personality of someone or something. 4.
Something pure or true as distinguished from something artificial or
contrived. 5. The basic instincts or impulses of someone or something.
6. The elements of the universe, such as mountains, plants, planets, and
stars.
10.capacity, n. 1. The role in which one performs an act <in her corporate
capacity>. 2. A legal qualification, such as legal age, that determines
one’s ability to sue or be sued, to enter into a binding contract, and the
like.  Unless necessary to show the court’s jurisdiction, a plaintiff’s
pleadings need not assert the legal capacity of any party. A party
wishing to raise the issue of capacity must do so by specific negative
pleading. – Also termed capacity to use. 3. The mental ability to
understand the nature and effect of one’s acts. – Also termed mental
capacity.
11.misleading, adj. (Of an instruction, direction, etc.) delusive; calculated
to be misunderstood.
12.render, vb. 1. To transmit or deliver <render payment>. 2. (Of a judge)
to deliver formally <render a judgement>. 3. (Of a jury) to agree on and
report formally <render a verdict>. 4. To pay as due <render an
83

account>.
13.subject matter. The issue presented for consideration; the thing in
which a right or duty has been asserted; the thing in dispute.
14. identity, n. 1. The identical nature of two or more things; esp., in
patent law, the sameness in two devices of the function performed, the
way it is performed, and the result achieved.  Under the doctrine of
equivalents, infringement may be found even if the accused device is
not identical to the claimed invention. 2. Evidence. The authenticity of
a person or ting.
15. separation agreement. An agreement between spouses in the process
of a divorce or legal separation concerning alimony, property division,
child custody and support, and the like. – Also termed separation order
(if approved or sanctioned judicially).
16. severance, n. 1. The act of cutting off; the state of being cut off. 2. The
separation of claims by the court, of multiple parties either to permit
separate actions on each claim or to allow certain interlocutory orders
to become final. – Also termed severance of actions; severance of
claims. 3. The termination of a joint tenancy in common. 4. The
removal of anything (such as crops or minerals) attached or affixed to
real property rather than a part of the land. – sever, vb. – severable,
adj.
17. misconduct. 1. A dereliction of duty; unlawful or improper behaviour.
2. An attorney’s dishonesty or attempt to persuade a court or jury by
using deceptive or reprehensible methods.
18. nullity. 1. Something that is legally void. 2. The fact of being legally
void.
19. non est factum. [Latin “it is not his deed”] Hist. A denial of the
execution of an instrument sued on.
20. indorsement, n. 1. The placing of a cignature, sometimes with an
additional notation, on the back of a negotiable instrument to transfer or
84

guarantee the instrument or to acknowledge payment. 2. The signature


or notation itself. – Also spelled endorsement. – indorse, vb.
21. proceeds, n. 1. The value of land, goods, or investments when
converted into money; the amount of money received from a sale. 2.
Something received upon selling, exchanging, collecting, or otherwise
disposing of collateral.
22. pawnbroker, n. One who lends money, usu. At a high interest rate, in
exchange for personal property that is deposited as security by the
borrower. – pawnbroking, n.
23. specific performance. A court-ordered remedy that requires precise
fulfilment of a legal or contractual obligation when monetary damages
are inappropriate or inadequate, as when the sale of real estate or a rare
article is involved. - Also termed specific relief.
24. rectification, n. 1. A court’s equitable correction of a contractual term
that is misstated; the judicial alteration of a written contract to make it
conform to the true intention of the parties when in its original form, it
did not reflect this intention. 2. A court’s slight modification of words
of a statute as a means of carrying out what the court is convinced must
have been the legislative intent.

Task 3. Answer the following questions.


1. What is mistake? Does it affect the validity of a contract?
2. What is the difference between mistake of law and mistake of fact?
3. Name the mistakes of fact that render a contract void.
4. What is the difference between a mutual mistake as to the identity of
the subject-matter and a fundamental common mistake? Give
examples.
5. What three elements must be present to render a contract void in case
of mistaken signing of written documents? Give examples.
6. Give examples to illustrate mistake of identity. Comment on them.
85

7. what other consequences of mistake can you name?

Task 4. Fill in the required legal term.


factor (4) • vitiate (2) • nullity (2) •capacity (2) • proceeds
1. The new statute … any common-law argument that the plaintiffs might
have. 2. Mr. Lawrence complains that his children were … by their
governess. 3. Punishment was a … in the court’s decision. 4. A … was
employed to sell goods for the company. 5. The company sold its receivables
to a … at only 5% of their stated value. 6. The … held $400 of the debtor’s
property when the writ of the garnishment was served. 7. She had full … to
bind the corporation with her signature. 8. His acute pain reduced his … to
understand the hospital’s admission form. 9. The forged commercial transfer
is a …. 10. She filed a petition for … of marriage. 11. The … are subject to
attachment.

Task 5. Translate into Russian.


1. A factor by the rules of common law and of mercantile usage is an agent to
whom goods are consigned for the purpose of sale, and he has possession of
the goods, power to sell them in his own name, and a general discretion as to
their sale. He may sell them on the usual terms of credit, may receive the
price, and give a good discharge to the buyer. 2. The word mistake is
generally used in the law of contracts to refer to an erroneous belief – ‘a belief
that is not in accord with the facts.’ To avoid confusion, it should not be used,
as it sometimes is in common speech, to refer to an improvident act, such as
the making of a contract, that results from such an erroneous belief. Nor
should it be used, as it sometimes is by courts and writers, to refer to what is
more properly called a misunderstanding, a situation in which two parties
attach different meanings to their language. 3. The general issue in covenant
is ‘non est factum’ which is a formal denial that the deed is the deed of the
defendant. 4. Proceeds differ from other types of collateral because they
86

constitute any collateral that has changed in form. For example, if a farmer
borrows money and gives the creditor a security interest in the harvest, the
harvested wheat is collateral. If the farmer then exchanges the harvest for a
tractor, the tractor becomes the proceeds of the wheat. 5. Specific
performance is an equitable remedy that lies within the court’s discretion to
award whenever the common-law remedy is insufficient, either because
damages would be inadequate or because the damages could not possibly be
established. 7. As an equitable remedy, the court alters the terms as written so
as to express the true intention of the parties. The court might do this when
the rent is wrongly recorded in a lease or when the area of land is incorrectly
cited in a deed. 8. Courts engage in rectification when they read and as or or
shall as may, as they frequently must do because of unfastidious drafting

Task 6. Fill in the appropriate article.


1. In this Restatement … word ‘mistake’ is used to refer to … erroneous
belief. … party’s erroneous belief is therefore said to be … mistake of that
party. … belief need not be … articulated one, and … party may have …
belief as to … fact when he merely makes … assumption with respect to it.
Without being aware of alternatives. … word ‘mistake’ is not used here, as it
is sometimes used in common speech, to refer to … improvident act,
including … making of … contract, that is … result of such … erroneous
belief. This usage is avoided here for … sake of clarity and consistency.
Furthermore, … erroneous belief must relate to … facts as they exist at …
time of … making of … contract. … party’s prediction or judgement as to
events to occur in … future, even if erroneous, is not … ‘mistake’ as that
word is defined here. … erroneous belief as to … contents or effect of …
writing that expresses … agreement is, however, … mistake. … mistake
alone, in … sense in which … word is used here, has no legal consequences.
… legal consequences of mistake in connection with … creation of
contractual liability are determined by substantive rules. 2. … term ‘common
87

mistake’ is more usually, but less grammatically, referred to as ‘mutual


mistake’. Cheshire and Fifoot on Contract have made … heroic effort to
introduce and establish … more correct term, and it does seem to be gaining
ground. However, … beginner is warned that … term ‘mutual mistake’ is
nearly always used by … Courts to mean what we here call ‘common
mistake’. 3. … clever indorser can subscribe his or her name under … variety
of … magic phrases. … qualified indorsements (‘without recourse’) limit …
liability of … indorser if … instrument is dishonoured. … restrictive
indorsements such as ‘for deposit only’, ‘pay any bank’, and … like set …
terms for further negotiation of … instrument. Their main purpose is to
prevent thieves and embezzlers from cashing checks.

Part 2. Misrepresentation.
The formation of a contract is often preceded by negotiations, in the course
of which one party makes statements of fact intended to induce the other to
enter into the contract. If any such statement is false, it is called a
misrepresentation.
A misrepresentation, then, may be defined as a false statement of fact, made
by one party to the contract to the other before the contract, with a view to
inducing the other to enter into it. The statement must have been intended to
be acted upon, and it must actually have induced the party to make the
agreement.
It must be a representation of fact, not law. A mere boast is not regarded as a
statement of fact (otherwise advertisers might incur substantial liabilities). A
distinction is also made between a statement of fact and a mere expression of
opinion, although this can prove difficult. Statements about a car such as
‘beautiful condition’ and ‘superb condition’ have been held in criminal cases
to be statements of fact, not mere expressions of opinion.
The statements must be by one party to the contract to the other. A statement
by the manufacturer which induces a customer to by from a rental shop will
88

not give the customer any remedy for misrepresentation against either
retailer or manufacturer.
The false statement must actually have deceived the other party and induced
him to make the contract. Obviously it must be false, but even a misleading
half-truth can be false.

In London Assurance v. Mansel (1879), a person seeking life assurance was asked on the
proposal form what other proposals for cover he had made. He answered, truthfully, that
he had made two proposals the previous year, both accepted. He did not mention,
however, that he had also had several proposals rejected. This half-truth was held to be a
misrepresentation. (See also non-disclosure)

Many misrepresentations also amount to promises which are actually


incorporated into the contract. In this event, the party deceived will normally
sue for breach of contract rather than for misrepresentation because, once
breach of contract is proved, damages will automatically be awarded. Where
mere misrepresentation is proved, the person liable may still have a defence
to an action for damages if he can prove that he reasonably believed himself
to be telling the truth. The distinction between mere representations and
contractual promises can be difficult, but in contracts of sale the court will
often hold that statements by a seller who is a dealer are contractual
promises, whereas statements by a seller who is not a dealer are mere
representations.

In Oscar Chess Ltd v. Williams (1957), the defendant was a private car owner, trading in
his vehicle in part-exchange for another. He falsely stated that it was a 1948 model,
whereas in fact it was a 1939 car. This statement was quite innocent, because the
registration book had been falsified by a previous owner. It was held that his statement
was a mere representation, so that his innocence was a defence.

On the other hand, in Dick Bentley Productions Ltd v. Harold Smith (Motors) Ltd (1965),
a dealer sold a car which appeared from the instruments to have travelled only 20000
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miles. In fact it had done about 100 000. This was held to be breach of contract, not a
mere misrepresentation, so that the buyer was automatically entitled to damages. A
dealer, who knows more about the goods than his customers do, is readily assumed to
promise that his statements are true.

Remedies for misrepresentation


1. Damages. Under the Misrepresentation Act 1967, section 2(1), a party
to the contract can recover negligence damages for loss arising from a
misrepresentation; but the other party has a defence if he can prove that, up
to the time of the contract, he believed that his statements were true, and had
reasonable cause so to believe. This can be difficult to prove, and the onus of
proving it is on the defendant.

In Howard Marine Ltd v. Ogden Ltd (1978), the owners made false statements about the
capacity of two barges to a company negotiating to hire them. The owners themselves
were mistaken, basing their claims on incorrect entries in the official Lloyd's Register.
Nevertheless the owners were liable to the company which hired the barges. Damages
were awarded under section 2(1) because the owners should have known the correct
capacity, and therefore could not prove that they had reasonable cause to believe their
misrepresentations.

In Corner v. Mundy (1988), the vendor of a house told a would-be purchaser that the
central heating was in good order. At the time, this was true. However, before the contract
was eventually made, the pipes froze and burst, and the purchaser was not told this. The
vendor was liable for damages under section 2(1), because he could not prove that he had
reasonable cause to believe up to the time the contract was made that his statement was
true.

Damages under s.2 (l) can be reduced for the claimant's contributory
negligence.
Under section 2(2), damages may also be awarded as an alternative to
rescission at the court's discretion and, in this event, even the defendant's
innocence may be no defence.
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If the misrepresentation was made fraudulently, the partly deceived can,


alternatively, sue for damages for the tort of deceit, but since the onus of
proving fraud is on the claimant, this will rarely be done.
2. Rescission. Any misrepresentation, even innocent, will give the other
party a right to rescind the contract, that is, to end it if he so wishes. Each
party must be restored to his original position; for example, the property
must be returned to the seller and the price to the buyer. The contract is said
to be voidable (Unit 1).
The right to rescind will be lost as soon as it becomes impossible to return
the parties to their position before the contract. For example, if the property
has been re-sold by the buyer, or has been destroyed by him, it will be
impossible to return it to the seller.
Since rescission is an equitable right, it must be exercised reasonably
promptly. It is undesirable for a contract to remain voidable for too long,
because this leads to uncertainty as to the ownership of the property. If he
delays unduly, therefore, the innocent party will lose his right to rescind, and
be left to sue for damages. What is a reasonable time is a question of fact,
and may in some cases be only a matter of days or hours.

In Leaf v. International Galleries (1950), which was mentioned earlier, the picture was
sold in 1944. The claimant only discovered in 1949 that it was not by Constable.
Although the contract was not void for mistake, the claimant claimed the right to rescind
for innocent misrepresentation. It was held that, after a lapse of five years, any right to
rescind had been lost. (The claimant could have claimed damages for breach of contract,
but did not in fact do so.)

Time may not run against the claimant, however, until he could with
reasonable diligence have discovered the error.
Normally, rescission will only be effective from the moment when it is
communicated to the party at fault. This would cause injustice, however,
where the misrepresentation was fraudulent and the rogue had disappeared.
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In this event, therefore, the rule is relaxed.

In Car and Universal Finance Co. Ltd v. Caldwell (1965), Caldwell was persuaded by a
rogue to part with his car in return for a cheque which was dishonoured. On discovering
this, Caldwell immediately told the police, but could do no more to rescind the contract
because the rogue could not be found. It was held that, in the circumstances, Caldwell
had done everything possible to make public his intention to rescind, and the rescission
was, therefore, effective.

Finally, the right to rescind will be lost if the innocent party 'affirms' the
contract, that is, elects to go on with it knowing of the misrepresentation. He
cannot blow hot and cold, and once he has decided to go on, he cannot
change his mind.
In addition to the civil remedies for misrepresentation, a false statement of
fact may also give rise to criminal liability, for example under the Trade
Descriptions Act 1968 or the Property Misdescriptions Act 1991.

Section 3 of the Misrepresentation Act makes it very difficult for a party to


exclude his liability for misrepresentation (Unit 4). A term in the contract
which would exclude or restrict any liability or remedy for misrepresentation
will be of no effect unless the defendant can show that the clause is
'reasonable' within the meaning of the Unfair Contract Terms Act 1977.
Exercises on the text.
Task 1. Read the text and translate it into Russian.
Task 2. Study the following legal terms and their definitions, supply
corresponding Russian terms, use them in situations of your own.
1. misrepresentation, n. 1. The act of making a false or misleading
statement about something, usu. with the intent to deceive. 2. The
statement so made; an assertion that does not accord with the facts.
– Also termed false representation; false misrepresentation. –
misrepresent, v.
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2. innocent misrepresentation. A false statement not known to be


false; a misrepresentation that, though false, was not made
fraudulently.
3. material misrepresentation. 1. Contracts. A false statement that is
likely to induce a reasonable person to assent or that the maker
knows is likely to induce the recipient to assent. 2. Torts. A false
statement to which a reasonable person would attach importance in
deciding how to act in the transaction in question or to which the
maker knows or has reason to know that the recipient attaches some
importance.
4. inducement, n. 1. The act or process of enticing or persuading
another person to take a certain course of action. 2. Contracts. The
benefit or advantage that causes a promisor to enter into a contract.
3. Criminal law. An enticement or urging of another person to
commit a crime. – induce, v.
5. representation, n. 1, A presentation of fact – either by words or by
conduct – made to induce someone to act, esp. to enter into a
contract.
6. remedy, n. The means of enforcing a right or preventing or
redressing a wrong; legal or equitable relief. – remedy, v.
7. deceit, n. 1. The act of intentionally giving a false impression. 2. A
tort arising from a false representation made knowingly or
recklessly with the intent that another person should detrimentally
rely on it.
8. assurance, n. 1. Something that gives confidence; the state of being
confident or secure <self-assurance>. 2. A pledge or guarantee. 3.
The act of transferring real property. – assure, v.
9. life insurance. An agreement between an insurance company and
the policyholder to pay a specified amount to a designated
beneficiary on the insured’s death. – Also termed assurance.
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10.damages, n. pl. Money claimed by, or ordered to be paid, to a


person as compensation for loss or injury. – damage, adj.
11.innocent, adj. Free from guilt; free from legal fault.
12.innocent party. A party who did not consciously or intentionally
participate in an event or transaction.
13.entitle, v. To grant a legal right to or quality for.
14.onus. 1. A burden; a load. 2. A disagreeable responsibility; an
obligation.
15.capacity. 1. The role in which one performs an act <in her
corporate capacity>. 2. The legal qualification, such as legal age,
that determines one’s ability to sue or be sued, to enter into a
binding contract, and the like.
16.cause, n. 1. Something that produces an effect or result. 2. A ground
for legal action.
17.negligence, n. 1. The failure to exercise the standard of care that a
reasonably prudent person would have exercised in a similar
situation; any conduct that falls below the legal standard established
to protect others against unreasonable risk of harm, except for
conduct that is intentionally, wantonly, or wilfully disregarded of
other’s rights. 2. A tort grounded in this failure, usu. expressed in
terms of the following elements: duty, breach of duty, causation, and
damages.
18.contributory negligence. 1. A plaintiff’s own negligence that
played a part in causing the plaintiff’s injury and that is significant
enough to bar the plaintiff from recovering damages. 2. Rare. The
negligence of a third party – neither the plaintiff nor the defendant –
whose act or omission played a part in causing the plaintiff’s injury.
19.award, v. To grant by formal process or by judicial decree.
20.alternative contract. A contract in which the performing party
may elect to perform one of two or more specified acts to satisfy the
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obligation; a contract that provides more than one way for a party to
complete performance, usu. permitting that party to choose the
manner of performance.

Task 3. Answer the following questions.


1. What is misrepresentation?
2. Why must it be a representation of fact, not law?
3. What is the difference between a false statement and a half-truth?
What are the consequences?
4. What happens if a misrepresentation is incorporated into the
contract as a promise?
5. State the difference between a mere representation and contractual
promise. What is the court’s opinion? Give examples.
6. What remedies for misrepresentation are available?
7. Why is it difficult to recover damages in case of
misrepresentation? Give examples.
8. What is rescission? In what case the right to rescind is lost? Why
should rescission be exercised reasonably promptly? When is
rescission effective?

Task 4. Fill in the required legal term.


damages • award (2) • assure • deceit (2) • cause
representation • capacity (2) • assurance
1. The buyer relied on the seller’s … that the roof did not leak. 2. The juror’s …
led the lawyer to believe that she was not biased. 3. The new homeowner sued
both the seller and the realtor for … after discovering termites. 4. The court
ordered to have adequate … of the borrower’s solvency. 5. The owner … the
farm to his son. 6. She obtained … before travelling abroad, naming her husband
as the beneficiary. 7. The plaintiff seeks $8,000 in … from the defendant. 8. She
had full … to bind the corporation with her signature. 9. His acute pain reduced
his … to understand the hospital’s admission form. 10. The plaintiff does not
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have … to file suit. 11. The company … the contract to the low bidder. 12. The
jury … punitive damages.

Task 5. Translate into Russian.


1. The materiality of a misrepresentation is determined from the viewpoint of
the maker, while the justification of reliance is determined from the viewpoint of
the recipient. … The requirement of materiality may be met in either of two
ways. First, a misrepresentation is material if it would be likely to induce a
reasonable person to manifest his assent. Second, it is material if the maker
knows that for some special reason it is likely to induce the particular recipient
to manifest his assent. There may be personal consideration that the recipient
regards as important even though they would not be expected to affect others in
his situation, and if the maker is aware of this the misrepresentation may be
material even though it would not be expected to induce a reasonable person to
make the proposed contract. One who preys upon another’s known
idiosyncrasies cannot complain if the contract is held voidable when he succeeds
in what he is endeavouring to accomplish… Although a nonfraudulent
misrepresentation that is not material does not make the contract voidable under
the rules stated in this Chapter, the recipient may have a claim to relief under
other rules, such as those relating to breach of warranty. 2. The tort of deceit
consists in the act of making a wilfully false statement with the intent that the
plaintiff shall act in reliance on it, and with the result that he does so act and
suffers harm in consequence. There are four main elements in this tort: (1) there
must be a false representation of fact; (2) the representation must be made with
knowledge of its falsity; (3) it must be made with the intention that it should be
acted on by the plaintiff, or by a class of persons which includes the plaintiff, in
the manner which resulted in damage to him; (4) it must be proved that the
plaintiff has acted upon the false statement and has sustained damage by so
doing.
Task 6. Fill in the appropriate article.
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1. … misrepresentation, being … false assertion of … fact, commonly takes …


form of …spoken or … written words. Whether … statement is false depends
on … meaning of … words in all … circumstances, including what may fairly
be inferred from them. … assertion may also be inferred from … conduct other
than words. … concealment or even … non-disclosure may have … effect of …
misrepresentation. 2. … assertion need not be fraudulent to be …
misrepresentation. Thus … statement intended to be truthful may be …
misrepresentation because of … ignorance or … carelessness, as when … word
‘not’ is inadvertently omitted or when … inaccurate language is used. But …
misrepresentation that is not fraudulent has … no consequences … unless it is
material. 3. … representation may induce … terms into … contract and effect
… performance: or it may induce … contract and so affect … intention of …
one of … parties, and … formation of … contract. At … common law, if …
representation did not afterwards become … substantive part of … contract, its
untruth was immaterial. But if it did, it might be one of … two things: (1) it
might be regarded by … parties as … vital term going to … root of … contract
(when it is usually called … ‘condition’); and in this case its untruth entitles …
injured party to repudiate … whole contract; or (2) it might be … term in …
nature only of … independent subsidiary promise (when it is usually called …
‘warranty’), which is indeed … part of … contract, but does not go to … root of
it; in this case its untruth only gives rise to … action ex contractu for damages,
and does not entitle … injured party to repudiate … whole contract. 4. …
remedy is anything … court can do for … litigant who has been wronged or is
about to be wronged. … two most common remedies are … judgements that …
plaintiffs are entitled to collect … sums of … money from … defendants and …
orders to …defendants to refrain from their wrongful conduct or to undo its
consequences. … court decides under … substantive law whether … litigant has
been wronged; it conducts its inquiry in accordance with … procedural law. …
law of remedies falls somewhere between … substance and … procedure,
distinct from both but overlapping with both. 5. … life and accident insurance
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has been defined as … contract whereby one party, for … stipulated


consideration, agrees to indemnify another against … injury by … accident or
… death from any cause not expected in … contract. Strictly speaking, however,
… contract of … life insurance is not one of … indemnity, but is … absolute
engagement to pay … certain sum at … end of … definite or … indefinite
time.

Task 7. Make up a story using the following words and collocations:


To be acted upon, to express opinion, to amount to, to be incorporated into, to
sue for breach of contract, to be entitled to damages, to be reduced for, to award
damages, the person liable.
Part 3.
Duty to disclose
There is, in general, no duty to disclose facts. Silence cannot normally constitute
misrepresentation even when the silent party knows that the other is deceiving
himself and does nothing about it. Each party must find out the truth as best he
can, and in contracts of sale this rule is known as caveat emptor—let the buyer
beware.
There is, however, a duty to correct statements which, although originally
true, have subsequently become false before the contract was made. The facts
have changed, and it would be unfair to let the original statement stand.

In With v. O'Flanagan (1936), at the start of negotiations for the sale of a doctor's practice, the
seller stated, truthfully, that the annual income was £2000. The seller then fell ill and, by the
time that the sale took place some months later, the profits had fallen drastically. It was held
that the early statement should have been corrected, and the fall disclosed.

Silence is also not enough in contracts of the utmost good faith (uberrimae
fidei). These are, for the most part, contracts where one party alone has full
knowledge of the material facts and, therefore, the law does impose on him a
duty to disclose. The main examples are:
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1. Contracts of insurance. There is a duty on the insured person to disclose to


the insurance firm any circumstances which might influence it in fixing the
premium or deciding whether to insure the risk. Failure to do this will render the
contract voidable at the option of the insurance firm.
2. In contracts for the sale of land, the vendor must disclose all defects in title,
but not in the property itself.
3. Contracts to subscribe for shares in a company. A prospectus issued by a
company, inviting the public to make an offer to buy shares in the company,
must disclose various matters set out in detail under the Companies Act. If it
does not, the contract may be rescinded.
4. In contracts of family arrangement, each member of the family must disclose
all material facts within his knowledge.

Duress and undue influence


At common law, duress arose when a party was induced to enter a contract by
force or the threat offeree. His consent was not freely given. Today, economic
coercion can also be duress.

In Universe Tankships Inc. v. ITF (1982), a trade dispute arose involving a ship, the Universe
Sentinel. The union stopped it from leaving port, and eventually only allowed it to do so on
condition that the owners paid money into a welfare fund. This agreement was held voidable
for duress, and the owners recovered the money.

However, the economic pressure must be such that the courts regard it as
improper. There can be a narrow line between economic duress and legitimate
commercial pressure.

In D & С Builders Ltd v. Rees (1966) (Unit 1), it was suggested, obiter, that even if there had
been a valid contract, it would have been voidable for duress. Mr and Mrs Rees almost held
the builders to ransom; the builders needed the money quickly, and the Rees family (who
owed £482) said in effect, 'either agree to accept only £300 or we delay still further'.
99

In Atlas Express Ltd v. Kafco Ltd (1989), K, a small manufacturer, received a good order from
a retail chain, Woolworth's. К contracted with Atlas, a road carrier, to deliver the goods at an
agreed fee. After the first load, Atlas realized that it had miscalculated the delivery costs, and
therefore told К that it would not make any further deliveries unless К almost doubled the
agreed fee. K, desperate to fulfil its Woolworth's order and unable to find another carrier in
time, had to agree—but later refused to pay the extra. It was held that К was not liable for the
extra charge, which had been extorted from it by duress (Moreover, there was no
consideration for its promise to increase the fee; contrast Williams v. Roffey, Unit 1.)

On the other hand, in Pao On v. Lau Yiu Long (1979) (Unit 1), the defendant was the major
shareholder in Fu Chip Ltd. He was persuaded to give a guarantee to Pao On by the latter's
threat to break his contract with Fu Chip Ltd. This could have harmed the defendant.
Nevertheless the guarantee was held valid. The full facts were complex, and Pao On's threat
was ultimately regarded as legitimate commercial pressure.

Equity has long recognized less direct pressures, particularly where confidential
or professional relationships are abused. Generally, improper pressure has to be
proved.

In Williams v. Bayley (1866), a father was induced to give security for his son's debts to the
bank by the bank's threats to prosecute the son. On proof of this, the father was held not to be
bound.

In some instances equity goes further and presumes undue influence unless the
contrary is proved. This can arise from the relationship between the parties: it is
presumed there is such influence by a doctor over his patient, solicitor over his
client, religious adviser over follower, parent over young child (but not
necessarily by husband over wife or vice versa). The presumption can only be
rebutted by proof that the weaker party used his own free will, fully understood
the proposed transaction, and preferably had had independent advice.
There are also situations where, although the relationship does not necessarily
suggest undue influence, the circumstances do. For example, there have been
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very many debt cases where wives (or husbands) have agreed to mortgage the
family home as security for the spouse's business debts, or elderly parents have
similarly been persuaded by adult children to give unwise security for the
children's business debts. The undue influence will not always be exerted
directly by the other party to the contract here, who is usually the bank (the
creditor). Nevertheless, in these situations, the bank should foresee the
possibility of its client (the debtor) putting undue pressure on the spouse or
elderly parent to give some sort of security to the bank, and even telling lies in
the process. Therefore, such a creditor has a duty to see that the person being
asked to provide security is fully aware of what he or she is doing, and is free
from undue influence either by the bank itself or by the main debtor. The bank
should generally ensure that the guarantor takes independent advice, particularly
where there might be manifest disadvantage. Documents should not normally be
entrusted to the debtor himself to obtain the spouse or parent's signature. Unless
the creditor can prove that it has taken all reasonable steps to safeguard the
potential victim, then the guarantee or mortgage will be voidable.

In Lloyd's Bank Ltd v. Bundy (1975), a son was in financial difficulty. The bank manager
visited the father and persuaded him to give the bank a guarantee of the son's debts and a
mortgage of the father's house as security. The father was old and was given no warning or
opportunity to seek independent advice (which might have been against the contracts). Undue
influence was presumed, and the contracts were set aside when the bank could not rebut the
presumption.

In Barclay's Bank plc v. О'Brien (1993), a husband persuaded his wife to mortgage the family
home as security for his present and future business debts. He misled her into believing that
her liability could be no more than £60000, and she signed on that basis. In fact, the
documents eventually enabled the bank to claim roughly double that amount. She was held
liable for only £60000. On equitable principles, the creditor who takes from a married person
security for the spouse's business debts must take all reasonable steps to see that the potential
liability is fully understood. The bank could not prove that it had done this.
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In Credit Lyonnais Bank v. Burch (1997), an employer required its employee to mortgage his
flat to the Bank as security for all of the employer's debts, present and future. It was held that
(1) the employment relationship did not raise the presumption of undue influence, but (2) the
circumstances did. The mortgage was set aside.

There are other situations where the circumstances can raise a presumption of
undue influence.

In О'Sullivan v. MAM Ltd (1985), a young singer and composer (Gilbert O'Sullivan) made
several contracts with a management company at a time when he had no business experience.
Many of the contracts were unduly harsh, and they were later set aside as having been
obtained by undue influence.

However, the court will only presume undue influence if the circumstances do
make it seem likely. For example, a bank or building society which lends money
to a married couple jointly, and takes a mortgage of the jointly owned family
home as security, need not normally advise each of them to take independent
advice. If the money is apparently sought by both, for the benefit of both, there
is nothing to suggest that either of them is unduly pressurizing the other. The
heavy burden of having to disprove undue influence only falls on the lender who
should have suspected it, as where the lender knows that the home is being used
to secure the business debts of only one of them.

In National Westminster Bank рlс v. Morgan (1985), a couple in financial difficulty


remortgaged their home to the bank. The house was jointly owned, and the bank manager had
to visit the wife to persuade her to sign. She did not realize that the new mortgage could also
cover her husband's business debts, but this was not the main purpose of the loan. She
received no independent legal advice at this stage. Nevertheless the mortgage was binding on
her. The loan was in fact used to pay off earlier mortgagors of the house, so as to save the
family home, albeit temporarily. The husband died leaving no business debts to the bank. The
wife herself had wanted the loan and had benefited from it. Therefore equity would not
intervene.
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In CISC Mortgages plc v. Pitt (1993), a married couple borrowed money jointly, and jointly
told the lender that it was to be used to pay off their existing mortgage, and to buy a holiday
home. In fact, unknown to the lender, the wife reluctantly allowed her husband to use the
money to speculate in shares in a very risky manner. The court refused to set aside the
mortgage. There was nothing in the circumstances known to the lender to make it presume
undue influence.

Where undue influence is deemed to exist, either by proof or presumption, the


contract is voidable either wholly or partly (see Barclays Bank v. O'Brien
above). However, the right to rescind/avoid a contract is an equitable one, and it
must therefore be exercised within a reasonable time.

In Allcard v. Skinner (1887), Miss Allcard joined a religious order and gave about £7000 to its
leader during the years when she was a member. After leaving the order, she waited several
years and then sued to recover the money. It was held that she had delayed for too long after
the end of the undue influence, and her action failed.

Exercises on the text.


Task 1. Read the text and translate it into Russian.
Task 2. Study the following legal terms and their definitions, supply
corresponding Russian terms, use them in situations of your own.
1. foreseeability, n. The quality of being reasonably anticipatable. –
foreseeable, adj.
2. foreseeable damages. Damages that a breaching party knew or should
have been aware of when the contract was made.
3. security, n. 1. Collateral given or pledged to guarantee the fulfilment of
an obligation; esp., the assurance that a creditor will be repaid (usu. with
interest) any money or credit extended to a debtor. 2. A person who is bound by
some type of guaranty. 3. The state of being secure, esp. from danger or attack.
4. An instrument that evidences the holder’s ownership rights in a firm (e.g., a
stock), the holder’s creditor relationship with a firm or government (e.g., a
bond), or the holder’s other rights (e.g., an option).
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4. liability, n. 1. The quality or state of being legally obligated or


accountable; legal responsibility to another or to society, enforceable by civil
remedy or criminal punishment. – Also termed legal liability. 2. (often pl.) A
financial or pecuniary obligation.
5. obiter, adv. [Latin “by the way”] Incidentally; in passing.
6. economic duress. An unlawful coercion to perform by threatening
financial injury at a time when one cannot exercise free will. – Also termed
business compulsion.
7. caveat emptor. [Latin “let the buyer beware”] A doctrine holding that
purchasers buy at their own risk. Modern statutes and cases have greatly limited
the importance of this doctrine.
8. contract uberrimae fidei. A contract in which the parties owe each other
duties with the utmost good faith.
9. necessities. 1. Indispensable things of any kind. 2. necessaries. Things
that are essential to maintaining the lifestyle to which one is accustomed. The
term includes whatever a reasonably needed for subsistence, health, comfort,
and education, considering the person’s age, station in life, and medical
condition, but it excludes (1) anything purely ornamental, (2) anything solely for
pleasure, (3) what the person is already supplied with, (4) anything that concerns
someone’s estate or business as opposed to personal needs, and (5) borrowed
money.
10. apprentice. 1. Hist. A person bound by an indenture to work for an
employer for a specified period to learn a craft, trade, or profession. 2. A learner
in any field of employment or business.
11. discretion. 1. A public official’s power or right to act in certain
circumstances according to personal judgement and conscience. – Also termed
discretionary power. 2. Criminal & tort law. The capacity to distinguish between
right and wrong, sufficient to make a person responsible for his or her own
actions. 3. Wise conduct and management; cautions discernment; prudence.
12. loan, n. 1. An act of lending; a grant of something for temporary use. 2. A
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thing lent for the borrower’s temporary use; esp., a sum of money lent at
interest.
13. subrogate, vb. To substitute (a person) for another regarding a legal right
or claim.
14. subrogation, n. 1. The substitution of one party for another whose debt
the party pays, entitling the paying party to rights, remedies, or securities that
would otherwise belong to the debtor. • For example, a surety who has paid a
debt is, by subrogation, entitled to any security for the debt held by the creditor
and the benefit of any judgement the creditor has against the debtor, and may
proceed against the debtor as the creditor would. 2. The principle under which
an insurer that has paid a loss under an insurance policy is entitled to all the
rights and remedies belonging to the insured against a third party with respect to
any loss covered by the policy.
15. continuing contract. A contract calling for periodic performances.
16. forfeiture, n. 1. The divestiture of property without compensation. 2. The
loss of a right, privilege, or property because of a crime, breach of obligation, or
neglect of duty. • Title is simultaneously transferred to another, such as the
government, a corporation, or a private person. 3. Something (esp. money or
property) lost or confiscated by this process; a penalty. – forfeit, vb. –
forfeitable, adj.

Task 3. Answer the following questions.


1. Why is there no duty to disclose facts? Give your examples.
2. Explain what ‘a duty to correct statements’ means. Give examples.
3. What can you say about contracts of utmost good faith? What are the
main examples? (4)
4. What is the difference between duress at common law and today? Give
examples.
5. Illustrate the difference between economic duress and legitimate
commercial pressure.
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6. How is equity applied in this aspect? Give examples.


7. Is it easy to prove undue influence of spouses? Why (not)?
8. Speak on a presumption of undue influence.
9. What is the attitude of the court to this problem? Give examples.
10. Why should the right to rescind/ avoid a contract in case of undue
influence be exercised within a reasonable time?

Task 4. Fill in the required legal term.


duty • immunity • loan(2) • obiter • liberty • necessaries (2)
• right • power • privilege

1. The term ‘liability’ is one of at least double signification. In one sense it is


the synonym of …, the correlative of …; in this sense it is the opposite of … or
…. If a duty rests upon a party, society is now commanding performance by him
and threatening penalties. In a second sense, the term ‘liability’ is the correlative
of … and the opposite of … . In this case society is not yet commanding
performance, but it will so command if the possessor of the power does some
operative act. If one has a power, the other has a liability. It would be wise to
adopt the second sense exclusively. Accurate legal thinking is difficult when the
fundamental terms have shifting senses. 2. The judge said, …, that a nominal
sentence would be inappropriate. 3. An infant’s … include food, shelter, and
clothing. 4. A multimillionaire’s … may include a chauffeured limousine and a
private chef. 5. Trina gave him the laptop as a …, not a gift. 5. Larry applied for
a car ….

Task 5. Translate into Russian.


1. Foreseeability, along with actual causation, is an element of proximate cause
in tort law.
2. Securities differ from most other commodities in which people deal. They
have no intrinsic value in themselves – they represent rights in something else.
The value of a bond, note or other promise to pay depends on the financial
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condition of the promisor. The value of a share of stock depends on the


profitability or future prospects of the corporation or other entity which issued it;
its market price depends on how much other people are willing to pay for it,
based on their evaluation of those prospects.
3. Liability or responsibility is the bond of necessity that exists between the
wrongdoer and the remedy of the wrong.
4. Caveat emptor is the ordinary law in contract. A vendor is under no duty to
communicate the existence even of latent defects in his wares unless by act or
implication he represents such defects not to exist.
5. Things may be of a useful character, but the quality or quantity supplied may
take them out of the character of necessaries. Elementary textbooks might be a
necessary to a student of law, but not a rare edition of ‘Littleton’s Tenures’, or
eight or ten copies of ‘Stephen’s Commentaries.’ Necessaries also vary
according to the station in life of the infant or his peculiar circumstances at the
time. The quality of clothing suitable to an Eton boy would be unnecessary for a
telegraph clerk; the medical attendance and diet required by an invalid would be
unnecessary to one in ordinary health. It does not follow therefore that because a
thing is of useful class, a judge is bound to allow a jury to say whether or no it is
a necessary.
6. Subrogation simply means substitution of one person for another; that is, one
person is allowed to stand in the shoes of another and assert that person’s rights
against the defendant. Factually, the case arises because, for some justifiable
reason, the subrogation plaintiff has paid a debt owed by the defendant.

Task 6. Fill in the appropriate article.


1. … security indicates … interest based on … investment in … common
enterprise rather than … direct participation in … enterprise. Under …
important statutory definition, … security is any interest or instrument relating
to … finances, including … note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in … profit-
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sharing agreement, collateral trust certificate, preorganization certificate or


subscription, transferable share, investment contract, voting trust certificate,
certificate of deposit for … security, fractional undivided interest in oil, gas, or
other mineral rights.
2. … courts have shown … willingness to recognize … concept of ‘economic
duress’. For instance it has been held that … defence on these grounds may be
available to … purchaser of … ship from … shipbuilder, if … latter extracts …
promise of … extra payment as … condition of … delivery of … ship.
3. In … certain restricted group of contracts … good faith is peculiarly
necessary owing to … relationship between … parties, and in these cases –
known as … contracts uberrimae fidei – there is … full duty to disclose all …
material facts. … typical instance of such contracts is … contract of insurance.
Here … duty to disclose all material facts to … insurer arises from … fact that
many of … relevant circumstances are within … exclusive knowledge of one
party, and it would be impossible for … insurer to obtain … facts necessary for
him to make … proper calculation of … risk he is asked to assume without this
knowledge.

Task 7. Make up a story using the following words and collocations:


To put undue pressure; to manifest disadvantage; to set aside a mortgage.

Part 4.
Lack of capacity to contract
The general rule is that everyone is fully capable of entering into contracts, and
that these contracts are enforceable by and against him. However, there are
certain classes of people whose contractual capacity is limited.

Minors (infants)
A minor or infant is a person under the age of 18. As a general rule, he will be
entitled to avoid his contracts and damages will not be awarded against him. For
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example, he will not be bound by trading contracts which he makes.

In Cowern v. Nield(1912), it was held that a minor who was a hay and straw merchant was not
liable to repay the price of the goods which he failed to deliver.

In Mercantile Union Guarantee Corporation Ltd v. Ball (1937), an infant haulage contractor
who took a lorry on hire-purchase was held not liable for arrears of instalments.

On the other hand, a minor can recover damages against an adult if the latter
breaks the contract. The minor can sue, but cannot be sued.
There are, however, a few limits on this rule. First, as regards actions against the
minor:
1. A minor must pay a reasonable price for necessary goods sold and delivered
to him. He need not pay the contract price if this is exorbitant, and in any event
he can withdraw from the contract at any time before delivery. Furthermore, this
rule only applies to 'necessaries', that is, goods suitable to the minor's condition
in life and to his actual requirements at the time of sale and delivery.

In Nash v. Inman (1908), an undergraduate ordered expensive clothes from a tailor, including
11 fancy waistcoats. The minor's father was a prosperous architect, and it was argued that the
clothes were suitable to the minor's station in life. Since he was already well supplied with
clothes, however, these goods were held not to be necessaries.

2. By the Minors' Contracts Act 1987, a court has a discretion, if it seems just
and equitable, to require an infant to transfer to the other party any property
acquired by the infant under the contract. (A court might now, therefore, order
the return of the waistcoats, or of the lorry in Mercantile Union Guarantee
Corporation v. Ball if such a case occurred today.) Before 1987, the court could
only do this if the minor was proved to have been fraudulent when he made the
contract.
3. Money lent to a minor cannot be recovered. However, if the money is lent to a
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minor specifically to enable him to buy necessaries, the lender can recover such
part of the loan as is actually spent on necessaries at a reasonable price. The
lender is said to be 'subrogated' to the rights of the supplier of the goods against
the minor.
4. Contracts of employment, apprenticeship and education which, taken as a
whole, are for the minor's benefit form the main full exception to the general
rule. If as a whole the contract is beneficial, the court will enforce all of the
clauses, even ones which, taken in isolation, are not beneficial.

In Doyle v. White City Stadium (1935), an infant boxer was held bound by a clause in his
contract which provided for forfeiture of his prize money if (as happened) he was
disqualified. The contract as a whole was similar to apprenticeship.

5. Special rules apply to contracts of a continuing nature which can last after the
minor reaches 18. A contract such as a lease, a partnership or the holding of
shares in a company can be binding before 18 unless the minor repudiates it. It
will continue to be binding after 18 unless the young person ends it within a
reasonable time of reaching full age.
6. Other contracts made while one party was a minor can, under the 1987 Act, be
ratified by him when he reaches full age. The contract was unenforceable against
him when he made it, but his ratification - if he does choose to ratify - may now
make it binding on him.
7. The Minors' Contracts Act makes it possible for an adult validly to guarantee
a minor's obligations under a contract. The guarantor can be liable if the minor
breaks his contract, even if the minor himself could not have been held liable.
Finally, as regards actions against the minor, the court will not hold him liable
for damages in tort if this would merely be an indirect way of awarding damages
for breach of contract.
There are also some exceptions to the rule that a minor can sue on his
contracts. For example, since the remedy of specific performance will never be
awarded against a minor, the court will not award it to a minor either (Unit 5).
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As another example, when a minor avoids the contract, as a general rule he can
recover money or goods which he has handed over, but if he has received a
benefit under the contract this will not be the case.

In Valentini v. Canali (1889), a minor leased a house and agreed to buy some furniture, paying
part of the price. After several months the minor left, and avoided the contract as he was
entitled to do. He could not recover the payments which he made for the furniture, however,
because he had received some benefit from the contract.

Other types of incapacity


Certain mental patients cannot validly enter into contracts. Contracts can be
made on their behalf by the Court of Protection or receivers appointed for this
purpose.
Ultra vires contracts are important examples of contracts that are void for
incapacity.

Exercises on the text.


Task 1. Read the text and translate it into Russian.
Task 2. Study the following legal terms and their definitions, supply
corresponding Russian terms, use them in situations of your own.
1. ultra vires, adj. Unauthorized, beyond the scope of power allowed or
granted by corporate charter or by law. – Also termed extra vires. – ultra vires,
adv.
2. ratification, n. 1. Confirmation and acceptance of a previous act, thereby
making the act valid from the moment it was done. 2. Contracts. A person’s
binding adoption of an act already completed but either not done in a way that
originally produced a legal obligation or done by a third party having at the time
no authority to act as the person’s agent. 3. International law. The final
establishment of consent by the parties to a treaty to be bound by it, usu.
including the exchange or deposit of instruments of ratification.
3. incapacity. 1. Lack of physical or mental capabilities. 2. Lack of ability to
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have certain legal consequences attach to one’s actions.

Task 3. Answer the following questions.


1. Is everyone fully capable of entering into a contract? Why (not)?
2. What rights do minors have? Give examples.
3. What limit the rule? (5)

Task 4. Fill in the required legal term.


ratify (2) • ultra vires • ratification • incapacity

1. The officer was liable for the firm’s … actions. 2. The board of directors …
the president’s resolution. 3. An adult’s … of a contract signed during childhood
is necessary to make the contract enforceable. 4. The parties … the nuclear-
weapons treaty. 5. Everyone knows that a five-year-old has an to make a binding
contract.

Task 5. Translate into Russian.


1. Damages are the sum of money which a person wronged is entitled to receive
from the wrongdoer as compensation for the wrong.
2. In the past the term ‘burden of proof’ has been used in two different senses.
(1) The burden of going forward with the evidence. The party having this burden
must introduce some evidence if he wishes to get a certain issue into the case. If
he introduces enough evidence to require consideration of this issue, this burden
has been met. (2) Burden of proof in the sense of carrying the risk of non
persuasion. The one who has this burden stands to lose if his evidence falls to
convince the jury – or the judge in a nonjury trial. The present trend is to use
term ‘burden of proof’ only with this second meaning.
3. Unless necessary to show the court’s jurisdiction, a plaintiff’s pleadings need
not assert the legal capacity of any party. A party wishing to raise the issue of
capacity must do so by specific negative pleading.
4. Negligence in law rangers from inadvertence that is hardly more than
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accidental to sinful disregard of the safety of others.


5. During the first half of the nineteenth century, negligence began to gain
recognition as a separate and independent basis of tort liability. Its rise coincided
in a marked degree with the Industrial Revolution; and it very probably was
stimulated by the rapid increase in the number of accidents caused by industrial
machinery, and in particular by the invention of railways. It was greatly
encouraged by the disintegration of the old forms of action, and the
disappearance of the distinction between direct and indirect injuries, found in
trespass and case. Intentional injuries, whether direct or indirect, began to be
grouped as a distinct field of liability, and negligence remained as the main basis
for unintended torts. Negligence thus developed into the dominant cause of
action for accidental injury in this nation today.

Task 6. Fill in the appropriate article.


1. Negligence is … matter or risk – that is to say, of … recognizable danger of
injury. In most instances, it is caused by … heedlessness or inadvertence, by
which … negligent party is unaware of … results which may follow from his
act. But is may also arise where … negligent party has considered … possible
consequences carefully, and has exercised his own best judgment. … utmost
universal use of … phrase ‘due care’ to describe … conduct which is not
negligent should not obscure … fact that … essence of … negligence is not
necessarily … absence of … solicitude for those who may be adversely affected
by one’s actions but is instead … behaviour which should be recognized as
involving … unreasonable danger to … others.
2. … subrogation is … equitable assignment. … right comes into … existence
when … surety becomes obligated, and this is important as … affecting
priorities; but such right of subrogation does not become … cause of action until
… debt is fully paid. Subrogation entitles … surety to use any remedy against …
principal which … creditor could have used, and in general to enjoy … benefit
of any advantage that … creditor had, such as … mortgage, lien, power to
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confess judgement, to follow trust funds, to proceed against … third person who
has promised either … principal or …. creditor to pay … debt.
3. … ratification may take place by … express words indicating … intention to
confirm … contract. These words may consist of a new express promise, or such
words as ‘I do ratify and confirm’. … mere acknowledgement that … contract
was in fact made and that it has not been performed is not sufficient as …
ratification. It is sometimes said that … ratification is ineffective unless made
with … knowledge of … possession of … legal power to disaffirm, but … cases
holding … contrary seem to have … better reason.

Test your professional English.


Task 1. Look at the following extracts from contract clauses. In each, a
navigating word has been underlined. Link the underlined word to its
meaning.
Contract clauses Meaning
1. now it is hereby agreed … a. by the terms of this agreement
2. subject as hereinafter provided b. to that thing just mentioned
3. you will find in the documents c. previously stated
herewith attached
4. the first instalment becoming due d. later in this document
one month from the date hereof
5. the failure of either party to e. after that event
exercise any right or remedy to which
it is entitled hereunder
6. by referring to the points f. by means of this document
mentioned therein or declaration
7. as thereby stated g. in that matter
8. and for a period of 12 months h. on that item
thereafter
9. the failure of either party to i. of this event
exercise any right or remedy shall not
constitute a waiver thereof
10. all statutory instruments or orders j. for that item
made pursuant thereto
11. the Initial Fee together with any k. with this document
VAT thereon
12. the cost of the product, and the l. of or about that
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monthly payments therefore


13. the aforementioned terms shall m. by means of or because of that
prevail over …

Task 2. Find the third person present simple verbs in these sentences and
underline them. Decide which of the three pronunciations is correct in each
case.
/s/ /z/ /iz/
1. Sometimes the accused pleads guilty in the
hope of reducing the sentence.
2. This information certainly helps the case for
the defendant.
3. If the judge dismisses the evidence we’ll
object.
4. Often a higher court commutes the death
sentence to one of life imprisonment.
5. She’s the director of an agency which
collects debts for other companies.
6. According to this document, Mrs Winter
claims ₤ 10,000 for damages for her home.
7. The contractor discharges the contract only
when all works are completed.
8. He leases office space from a large property
company.
9. On these grounds my client repudiates this
contract.
10. This document summarises the events
leading to the raid on the house.
11. Being a judge disqualifies you from being a
Member of Parliament.
12. Sometimes a court acquits someone who is
guilty.
13. This letter corroborates the accused’s alibi.
14. We need to know if the company intends to
sue for damages.
15. Our legal advisor recommends that we do
not apply for an injunction.
16. My client owns a publishing company in
Brazil.
17. The committee discriminates between
proposals on grounds of community benefit.
18. This company employs more than 5,000
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people in 16 countries.
19. We have a department which assesses
property for the purposes of insurance.
20. The government taxes this type of
transaction at 8%.
21. After he signs he won’t be able to change
his mind again.
22. The next national holiday falls on a
Monday.
23. Some people feel that the arrival of
multinationals corrupts local bureaucrats.
24. The family still controls the business.
25. Our lawyer advises us that we can sue if we
wish to.

Task 3. Some words have more than one meaning. Identify the following eight
words. Two or three meanings are given for each word.
1. This word means:
 A meeting or a series of meetings: ‘There is a Democratic
_____________ in August’
 An international treaty: ‘All the countries agreed to a new arms
____________ .’
 The way something is usually done: ‘We have a ____________ that the
President enters first.’
2. This word means:
 Money invested or borrowed: ‘You don’t pay off the _____________ until
the end of the loan period’.
 A person or company represented by agents: ‘The agent has come to
London to see his ______________ ‘.
 A person responsible for something: ‘Whose name appears on the
contract as ______________?’
3. This word means:
 Something which is for sale: ‘This _______________ is very attractively
priced.’
 A section of a legal agreement: ‘If you look at ______________ 7 of the
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contract you’ll see why.’


4. This word means:
 An area of land: ‘The _______________ is 100 square kilometres,’
 Property left by a dead person: ‘His _____________ was worth $ 1.5m.’
5. This word means:
 Proper, correct: ‘We will not release the document without
_____________ procedure being followed.’
 Owed: ‘The next payment is ________________ on the 5th of October,’
 Expected to arrive: ‘He isn’t _______________ until seven o’clock.’
6. This word means:
 To say something clearly: ‘I ____________ now that my client is
completely innocent.’
 Independent country: ‘All citizens have obligations to the
________________ .’
7. This word means:
 Special attention: ‘I took a particular _______________ in this case.’
 Money paid for the use of money: ‘What is the current rate of
___________ ?’
 Ownership of shares in a company: ‘He has a majority ______________
in a newspaper.’
8. This word means:
 To put into words or diagrams: ‘You must _______________ the idea
more clearly.’
 Very fast: ‘I’ll send the papers to you ______________ delivery.’

Task 4. A. Link each verb on the left with a noun on the right.
Verbs Nouns
Break A case
Commit A market
Cross examine A fee
Charge An interest
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Declare A law
Enter A crime
Evade A verdict
Hear Terms
Negotiate A witness
Return Taxes

B. Complete these sentences using the collocations from A. You may have to
make some changes to fit the grammar of the sentences.
1. You must know that you are ________________ when you park on the
pavement.
2. The merger will only go ahead if the two companies can ______________
they are both happy with.
3. After two hours’ deliberation the jury ________________ of not guilty.
4. We are going to _______________ with a revolutionary new product next
moth.
5. A good accountant can save you money by finding ways to ____________ .
6. We have ______________ for the prosecution, which depends on an
unreliable identification.
7. When she was _________________ he contradicted his earlier testimony.
8. I am innocent; I did not ____________________ you accuse me of.
9. During the recent debate on this matter Mr Allen failed to
_________________; he is a director of the company bidding for the contract.
10. Most solicitors do not _________________ for the first consultation.

Task 5. There are 15 words connected with politics in the box below. Use them to complete the sentences – in
some cases you will need to make them plural.

abstentions • budget • consensus • constitution • devolution • houses •


leader • leak • legislation • policy • membership • poll • recess •
spokesman • veto

1. Germany has a federal _______________ .


2. A government _______________ revealed that discussion had been
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concluded on the treaty.


3. According to the latest opinion ______________ the Prime minister is
more unpopular than ever.
4. Austria’s application for ______________ of the EU was successful.
5. Many Welsh would like to see more ______________ of power from
Westminster.
6. Parliament has introduced _______________ to control the sale of drugs.
7. The bill was passed by both ________________ and sent to the President
for signature.
8. The crisis happened during the summer _______________ and
Parliament had to be recalled.
9. The government is investigating the latest _______________ of
documents relating to the spy trial.
10. The government is running a tight monetary ____________ to try to
control inflation.
11. The _______________ of the opposition criticised the Prime Minister for
his failure to act.
12. The motion was carried by 200 votes to 150; there were 60 _________ .
13. The President has the power of _____________ over bills passes by
Congress.
14. There is a _______________ between all the major parties about what we
should do now.
15. The minister pas put forward a ______________ aimed at slowing down
the economy.

Task 6. Render into English.


1. Мы предлагаем вам этот товар, при условии получения Вашего
подтверждения не позднее 15 марта.
2. Все цены, указанные в этом каталоге, могут подлежать изменению
без предупреждения (without notice).
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3. Это предложение действительно лишь в том случае, если


оборудование еще не будет продано по получении Вашего ответа.
4. Мы получили Ваше письмо от 14 марта, в котором Вы отзываете
Ваше предложение от 8 марта на данное оборудование. Мы полагаем, что
Вы уже получили наше письмо от 12 марта, содержащее наш акцепт Вашей
оферты. Просим поэтому прислать нам контракт на продажу этого
оборудования.
5. Мы согласны, чтобы наша оферта от 10 марта оставалась открытой
для акцепта до 25 марта, как самый поздний срок.

Specimen questions
1. (a) Explain the effect of mistake upon the validity of a contract.
(b) David agrees to insure his premises with ERC Insurance after ERC Insurance
has told him that he would be comprehensively covered against all risks. The
contract includes a clause that David's cover will only continue if he obtains an
annual fire certificate to the effect that all reasonable precautions against fire are
being taken. David signs the contract without reading it and consequently does
not obtain the requisite fire certificates each year.
Some years later the premises are destroyed by fire and ERC Insurance refuses
to reimburse David for his loss.
Advise David.
2. В bought a business from S. Two years later, В realized that S had (probably
unintentionally) made false statements to him about the business, which had
persuaded В to buy. Discuss the remedies that В might have against S.
3. While negotiating to sell his business to Ivan, Henry made a true statement
that gave total figures for turnover and profits for the previous five years. This
created an impression that the business was in a healthy state. Henry did not
disclose, nor did Ivan request, a breakdown of figures, which would have
revealed a steady decline in profitability over the previous year. Ivan, having
purchased the business, discovered the true state of affairs.
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What remedies, if any, does Ivan have? Discuss the possibilities.


4. Brian agrees to buy a computer from Stella. Explain how each of the
following would affect the contract.
(a) Brian believes that he is obtaining credit over six months, whereas Stella
believes that it is a cash sale.
(b) Both Brian and Stella believe that the contract price of £4000 represents the
true value of the computer but, because of a latent defect in its manufacture, the
computer is only worth £2000.
5. Husband and wife (// and W) own their house jointly. W wishes to borrow a
specific sum to help her to expand her office machinery business. She
approaches the bank, which is willing to lend as long as the house is mortgaged
to the bank as security. H agrees to this without realising that the loan agreement
allows W to borrow further sums if needed. The business is now insolvent,
and //and W cannot repay the amount due. The bank seeks possession of the
house. Discuss the legal issues.

Glossary
1. abide, v (1)
2. absolute, adj. (2)
3. acceptance, n. - conditional acceptance (2)
4. action (1)
5. adequate, adj (1)
6. agreement. N (1)
 formal agreement.
 invalid agreement..
 simple agreement.
 valid agreement. .
 voidable agreement.
 void agreement
7. apply, vb (2)
8. apprentice (3)
9. arbitrator, n. (2)
10. arrear, n. (usu. pl.) Also termed arrearage (1)
11. assent, n. – assent, vb. (2)
 constructive assent.
 express assent.
 implied assent.
Assurance (3)
12. award (3)
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13. bill, n. (1)


14. bill of exchange, n - Also termed draft; letter of exchange (1)
15. bind. v - binding. adj - binder. n. (1)
16. breach, n - breach, vb. (1)
 breach of contract..
 active breach of contract.
 anticipatory breach.
 continuing breach.
 efficient breach..
 material breach..
 partial breach.
 passive breach of contract.
 total breach.
17. capacity (3)
18. cause (3)
19. caveat emptor (3)
20. cease, vb. – cessation, n.
21. check, n (1)
22. claim, n. (1)
23. communication, n (2)
24. conclusive presumption.. – Also termed absolute presumption; irrebuttable
presumption; mandatory presumption; presumption juris et de jure. (1)
25. condition, n (2)
 express condition.
 implied condition..
26. contract. n (1)
 adhesion contract.
 Alternative contract (3)
 Continuing contract (3)
 contract under seal..
 invalid contract..
 unenforceable contract. Also termed agreement of imperfect obligation.
 contract uberrimae fidei (3)
 valid contract.. – Also termed valid agreement.
 voidable contract.
 void contract. Also termed discharged contract.
27. consideration. n. (1)
 adequate consideration..
 inadequate consideration..
 past consideration.
 sufficient consideration. Also termed due consideration; legally sufficient
consideration.
 valuable consideration.. – Also termed good and valuable consideration; legal
consideration
28. convey, vb - conveyance, n. (1)
29. counteroffer, n – counteroffer, vb. – counterofferor, n. (2)
30. damages (3)
31. dealer, n (2)
32. deceive/ deceit (3)
33. defect (3)
34. destitute, adj.. (1)
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35. detriment. - detriment to a promisee. (1)


36. discretion (3)
37. dispensation, n. (2)
38. duration, n (2)
39. duress, n. (1)
40. economic duress (3)
41. duty, n (1)
 legal duty.
 moral duty– Also termed natural duty.
 public-duty doctrine.– Also termed public-duty rule
42. effect, n. (1)
43. enforce. V (1)
 enforcement. n..
 unenforceable, adj.
44. entitle, vb. - entitlement, n (1)
45. equitable, adj. (1)
46. estoppel, n. - estop, vb (1)
 equitable estoppel.– Also termed estoppel by conduct; estoppel in pais. 2. See
promissory estoppel.
 promissory estoppel.– Also termed (inaccurately) equitable estoppel.
47. expiration,– expire, vb. (2)
48. foreseeability, foreseeable, foreseeable damages (3)
49. forfeiture (3)
50. good faith, n. Also termed bona fides. (1)
51. goods, n. (2)
52. guarantee, n.. – Also termed guaranty (1)
53. hire-purchase agreement.– Also termed lease-purchase agreement; lease-
to-purchase agreement; capital lease. (1)
54. identity (3)
55. impunity. - immunity. n. (1)
56. incapacity (3)
57. inconsistent, adj. (1)
58. incorporate, vb (2)
59. incur, vb. – incurrence, n. – incurrable, adj (1)
60. indorsement (3)
61. induce/ inducement (3)
62. innocent (3)
63. innocent party (3)
64. intention, n.. (1)
65. inter alia, adv (2)
66. lapse, n - lapse, vb (2)
67. lease, n.– Also termed lease agreement; lease contract. (1)
68. liable, adj (1)
69. liability (3)
70. life insurance (3)
71. limit, n. – limit, vb. – limited, adj. (2)
72. loan (3)
73. minor, n– Also termed infant. (1)
74. misconduct (3)
75. misleading (3)
76. misrepresentation (3)
77. mistake/mistake of law (3)
123

78. mortgage, n. (1)


79. necessaries = necessities (3)
80. negligence (3)
81. contributory negligence (3)
82. non est factum (3)
83. nullity (3)
84. obiter (3)
85. offer, n– offer, vb. – offeror, n. – offeree, n. (2)
 offer to all the world..
 public-exchange offer
86. onus (3)
87. option, n. (2)
88. pawnbroker (3)
89. performance, n.– Also termed full performance. – perform, vb. (1)
90. presumption. (1)
91. proceeds (3)
92. promissory note.– Also termed note of hand. (1)
 promise, n.. – promise, vb. - a promisee
 promisor, n..
93. public policy– Also termed policy of the law. (1)
94. purport, n. purport, vb. (2)
95. qualification, n.– qualify, vb. - qualified, adj (2)
 qualified acceptance
96. ratification (3)
97. reasonable person - Also termed reasonable man; prudent person; ordinarily
prudent person (2)
98. rebut, vb (1)
99. rectification (3)
100. rejection, n.– reject, vb. (2)
101. remedy (3)
102. render (3)
103. renewal, n. – renew, vb (1)
104. rental, n.– rental, adj (2)
105. representation (3)
106. repudiation; (2)
107. rescission (2)
108. retailer, n.(2)
109. retract. (2)
110. revocation, n.– revoke, vb. (2)
111. sanction, n (2)
112. sale, n. (1)
113. satisfaction, n– satisfy, vb.(1)
114. security (3)
115. separation agreement (3)
116. severance (3)
117. source, n. (2)
118. specific performance (3)
119. subject matter (3)
120. subrogate/subrogation (3)
121. tenant (2)
122. tender, n.– tender, vb. (2)
123. tender of delivery.
124

124. terminate, v. (1)


125. title. (1)
126. transaction. n.(1)
127. ultra vires (3)
128. undertaking, n. (2)
129. undue influence (1)
130. valid, adj validate, vb. – validation, validity, n. (1)
131. value, n. – value, vb. – valuation, n. (1)
132. vendor, n. – Also termed venditor (2)
133. void,. – void, avoid, v. – voidness, n. - voidable, adj.. – voidability, n. (1)
134. vitiating factor (3)
135. withdrawal, n.– withdraw, vb. (2)