Read the text about contracts and answer the questions.
Requirements for a Contract
Contracts are legally binding agreements, and they pervade almost every aspect of our personal and business lives. If you own or manage a business, you deal with contracts all the time in your relations with employees, contractors, vendors, commercial landlords, banks, utilities, insurance companies, and, of course, customers and clients.
What makes a contract special – and essential for business dealings – is that it is binding on the parties. If one party doesn't fulfil its obligations, the other party has legal remedies for any resulting damages.
To be enforceable by a court, every contract (whether written or oral) must meet several requirements:
Consideration. As Cole Porter wrote in the song, True Love, "You give to me and I give to you." That sums up consideration. Each party has to promise or provide something of value to the other. Without this exchange, there is no contract.
Offer and acceptance. There must be a clear or definite offer to contract ("Do you want to buy this?") and an unqualified acceptance ("Yes!").
Legal purpose. The purpose of the agreement must not violate the law. For example, you won't be able to enforce a loan agreement that charges interest in excess of what is allowed by law or a service agreement to hire someone to rob a bank or kill your mother-in-law.
Capable parties. To be "capable" of making a contract, the parties must understand what they're doing. For example, there is a presumption that minors and insane people usually don't know what they're doing and, for that reason, contracts they enter into won't be enforced under certain circumstances.
Mutual assent. This is also sometimes referred to as a "meeting of the minds." The contracting parties must intend to be bound by their agreement and must agree on the essential terms.
In addition to these general rules, laws may impose more requirements on particular types of contracts. For example, certain consumer contracts must meet additional requirements, and some contracts must be in writing.
1. Why are contracts so important in life today?
2. What is the main characteristic feature of a contract?
3. Are you able to make any kind of contract?
4. What difficulties may people have with contracts?
Match the types of contract to their definitions.
| 1. a lease | a) a contract between a seller (or vendor) and a buyer (or purchaser) |
| 2. an employment contract | b) a contract between an employer and employee |
| 3. a contract of sale | c) a contract between an insurance company and a person who pays for the insurance |
| 4. an insurance policy | d) a contract which allows one party (the tenant) to use the land or property of the other party (the landlord) for a specified period of time |
| 5. a software license | e) a contract which allows someone to use a computer programme |
| 6. a credit agreement | f) a legal contract in which a bank agrees to loan a customer a certain amount of money for a specified amount of time |
Contracts often use formal and outdated language. Look at the example. Can you guess what the word “hereinafter” means?
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“The supplier delivers the goods to the entrance of the customer; hereinafter the customer is responsible for the goods.”
Match some other “contract” phrases with their meanings:
hereinafter heretofore whereas herein in behalf of hereby
1. in here; in this (document etc)
2. up until now; until the present; before this
3. in the interests of (person etc)
4. starting from a particular time
5. it being the case that; in view of the fact that
6. as a result
Use these examples to help you:
· The company named above (hereinafter referred to as "the contractor") ...
· the schedule hereto attached
· payment of the obligations herein
· We do not warrant that the website will meet all your needs.
· By signing this contract, you hereby accept the terms and conditions.
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