Chose the phrase which best completes each statement. Sometimes more than one variant is possible.

1) A contract is formed when …

a. one party makes an offer.

b. one party makes an offer and the other party accepts it.

c. one party signs the contract.

d. one party promises the other party to give up doing something.

2) Consideration is ….

a. the terms of the contract.

b. the fulfilment of the contract.

c. the money paid under the contract.

d. the damages awarded by court.

3) In order for the contract to be binding …

a. the offer and the acceptance must match each other.

b. the contract must be in writing.

c. the other party must make a counter-offer.

d. the contract must be duly performed.

4) The essential terms of a contract are …

a. the terms of the contract.

b. the time the contract must be performed.

c. the partries to the contract.

d. the price and the subject matter of the contract.

5) A party may not escape its obligations under the contract if ….

a. the subject matter of the contract is illegal.

b. it has made a counter-offer.

c. there is fraud in the inducement.

d. the party lack legal capacity to contract.

6) Usually remedies for the breach of contract are in the form of …

a. money paid to the non-breaching party.

b. specific performance.

c. prison term awarded to the breaching party.

d. death penalty.

7) A  party to a contract which transfers the rights under a contract to a third party is called ….

a. an assignor.

b. an assignee.

c. a delegate.

d. a delegatee.

 

 

ADDITIONAL READING

Text 1

STRUCTURE OF A COMMERCIAL CONTRACT

Part I

 

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

Heading

For example, ‘Distributioin Agreement’.

Commencement and Date

Usualy a commercial contract contains a brief introduction which describes the nature of the agreement, for example ‘This Agreement for the sale of …’ or ‘This Share Agreement …’. The commencement clause will state the date on which the provisions, or conditions of the contract, are to come into effect. The date is usually inserted in the relevant space at completion – the last stage in the formation of a contract.

Parties

The full details of parties are set out. In the case of a company, the registered number is included. This remains unchanged during the life of the company despite any changes of name or registered office.

Recitals

Also known as Background or Preamble. These paragraphs are traditionally introduced by the word WHEREAS (conventionally, key words are in capital letters or have an initial capital). The recitals consist of a statement of background facts and the reasons why parties are to enter into the contract. Related or preceding transactions may be referred to. If a later dispute arises concerning the operative part, the recitals may be used to interpret intentions.

Operative provisions

Often introduced by expression ‘ The Parties Hereby Agree as follows…’ or similar words, for example, ‘Whereby it is Agreed as follows …’. These words signal the start of the operative part of the contract, containing various clauses which create rights and obligations, or create and transfer interests in property. Operative provisions in more complex agreements may refer to more details

Definitions

This section states the meaning to be attributed to terms essential to the contract – the defined terms. Most defined terms are conventionally given capital initial letters, for example, Security Documents or Completion Date. In the absence of a definition, words within the contract will be given their ordinary and natural meaning.

Interpretation

The aim of this section is to assist in the interpretation and construction of the whole contract by referring to specific uses. There are a number of provisions included in most contracts, for example ‘Words denoting the singular include the plural meaning and vice versa’.

Conditions precedent

These pre-conditions must be satisfied in order for the agreement, or the relevant part of it, to come into force, for example the grant of planning permission. The conditions precedent clause stipulates, or imposes, obligations on the relevant party to procure the satisfaction of the condition and provide a date by which time the condition precedent must be satisfied. It is usual for an agreement to terminate automatically if this is not achieved by the specific date.

Consideration

For a contract to be enforceable, something of value must be given, for example, a price, even if it is of nominal value, say $1.

Schedules

Section at the end of the contract containing specific provisions and documents, for example the Transfer Deed in a contract for a sale of land.

 

 

Do the task.