LECTURE 4

CONTRACTS

I. Before you read the passage, talk about these questions :

1. What makes a contract valid ?
2. Why do businesses need to rely on contracts ?

II. Listen the email below. Then, choose the correct answers.

Elements of a valid contract

Dear Max,

Mr. Peterson called us today to ask about the terms of a new contract. He wants to assent to the
other party’s offer. He would like to meet with you before giving acceptance, though. He also
wants to know if his company will be giving the right consideration in return for the other
company’s consideration services.
The object of the contract is an exchange of goods and services between two companies. Mr.
Peterson would like you to look at the contract to make sure that is valid.
Above all, the terms should be binding. He wants it to be enforceable in case there is ever a
dispute and they need to sue.

I have attached a copy of the contract here for you to review. Please let me know if you want to
set an appointment with Mr. Peterson.

Best,
Jane

1. According to the passage, what is [Link]’s contract about ?

A. An enforceable dispute
B. An exchange of goods and services
C. The need to sue
D. An external dispute

2. Mr. Peterson wants to:

A. Give the contract more consideration
B. Meet with the other party
C. Accept the other party’s offer
D. Ask the lawyer to write a contract

3. To be enfoceable, the terms of the contract must be

A. Disputed
 [Link]
C. Reviewed
D. Binding

4. Consideration can be:

A. Money
[Link]
C. Rights
D. All of them

[Link] to a conversation between a legal assistant and a client. Complete the

conversation. Then answer the questions.

Legal Assistant: Hello, [Link]. How are you today?

Client:Hi, Mary. I’m all right. I’m afraid I’m having a 1............... ........................with a partner
company.

Legal Assistant: Sounds like bad news. Do you want to make a (n) 2........... with [Link]?

Client:Yes. I need to make sure that the terms of our contract are 3.................

Legal Assistant: You have a 4.................contract?

Client:Yes, but I don’t know whether it’s 5....................

Legal Assistant:I see. Our office will go over it with you.

Client: The sooner the better.

Legal Assistant: Would you like to 6 ................. .......................on Wednesday?

1. What problem is [Link] having?

A. His contract with his employee is non-binding.

B. He has had an argument with another company about their contract

C. He wants to negotiate the terms of a new contract

D. He needs the lawyer to rewrite a binding contract

2. The legal assistant suggests that the client.............the contract.

A. Terminate [Link] a lawyer to review

B. Enforce D. Assent
IV. Read the text and find out if the statements are true or false.

Contract law deals with promises which create legal rights. In most legal systems, a contract is
formed when one party makes an offer that is accepted by the other party. Some legal systems
require more, for example that the parties give each other, or promise to give each other,
something of value. ln common law systems, this promise is known as consideration. ln those
systems, a one-sided promise to do something (e.g. a promise to make a gift) does not lead to the
folmation of an enforceable contract, as it lacks consideration.

When the contract is negotiated, the offer and acceptance must match each other in order for the
contract to be binding. This means that one party must accept exactly what the other party has
offered. lf the offer and acceptance do not match each other, then the law says that the second
party has made a counter-offer (that is, a new offer to the first party which then may be accepted
or rejected). For there to be a valid contract, the parties must agree on the essential terms. These
include the price and the subject matter of the contract.

Contracts may be made in writing or by spoken words. If the parties make a by spoken words, it
is called an oral contract. In some jurisdictions, certain special types of contracts must be in
writing or they are not valid (e.g. the sale of land). Contracts give both parties rights and
obligations. Rights are something positive which a party wants to get from a contract (e.g. the
right to payment), obligations are something which a party has to do or give up to those rights
(e.g. the obligation to do work).

When a party does not do what it is required to do under a contract, that party is said to have
breached the contract. The other party may file a lawsuit against the breaching party for breach
of contract. The non-breaching party (sometimes called the injured party) may try to get a court
to award damages for the breach. Damages refers to money which the court orders the breaching
party to pay to the non-breaching party in compensation. Other remedies include specific
performance, where a court orders the breaching party to perform the contract (that is, to do what
it promised to do). A party may want to transfer its rights under a contract to another party. This
is called an assignment. When a party assigns (gives) its rights under the contract to another
party, the assigning party is called the assignor and the party who gets the rights is called the
assignee.

Read the text again and decide whether these statements are true (T) or false (F).

1. In all legal systems, parties must give something of value in order for a contracto be formed.

2. An offer must be met with a counter-offer before a contract is agreed.

3. Oral contracts are not always valid.

4. lf in breach, the court will always force the party to peform the contract.
5. Assignment occurs when one party gives its contractual rights to another party

V. Complete these sentences using the words in the box.

Breach counter-offer damages formation terms

1. Usually, contract occurs when an offer is accepted.

2. A new offer made by one party to another is called a .
3. The price and the subject matter of a contract are the essential of a
contract
4. When a party does not do what it has promised to do under a contract, it can be sued for
of contract.
5. A court can award to the non-breaching party.

VI. Choose the correct verbs in italics.

1. My client has requested to make / file/ award a lawsuit against you for breach of contract.
2. You accepted/ awarded/ admitted the offer my client made to you.
3. When you signed the contract, legal rights were called/ claimed/ created which are
enforceable under the law.
4. Since you have not carried out your obligations under the contract, you have clearly
assigned/ rejected/ breached the contract.
5. My client intends to claim/ accept/ enforce damages for all of the losses incurred as a result
of the breach.

VII. Complete the following sentences using the prepositions in the box.

against for in into to (twice) to under

1. An individual or a business may enter a contract.
2. Anyone who is not a party the contract is considered a third party and cannot
be obligated to do anything required the contract.
3. If one of the parties breaches a contractual obligation, the non-breaching party may file a
lawsuit the breaching party.
4. Furthermore, a party will not be required to perform its contractual obligations if another
party is breach.
5. Damages are awarded a party any loss that the party has
suffered as a result of a breach of contract.