Legal English and the Common Law AY 2017/2018 Università degli Studi di Roma ″Tor Vergata″ Dipartimenti di Diritto Privato e di Diritto Pubblico Prof. Paola Lucantoni

The Language of Contract Law «A contract is an agreement giving rise to obligations which are enforced or recognised by law. The factor which distinguishes contractual from other legal obligations is that they are based on the agreement of the contracting parties.» Sir Guenter Treitel, The Law of Contract, 1999.

The Language of Contract Law. Key elements Contract and Agreement In the common law system, scholars agree that it is difficult to give a definitive or comprehensive definition of a contract; English law has no formal definition of a contract, a basic definition could be: a contract is a legally binding agreement between two or more parties. Agreement is a general word that indicates a decision or arrangement between people or organisations, relating to business, politics, family or social life, but without legal force. Sometimes agreement is used as a synonym for contract, but: if every contract is an agreement, not every agreement is a contract. A contract in itself constitutes a type of agreement, it is a legally binding agreement, that is an agreement enforceable in a court of law: if one party does not perform its obligations under the contract, the other party can make a claim to the civil courts, requesting a remedy. A requisite is a necessary element. The time of agreement is when one party accepts an offer made by the other: a contract is generally formed (concluded) at the moment of acceptance.

The Terms of the Contract The terms of the contract (or contractual terms) are the rights and the duties of the parties under the contract. A contract consists of express terms and implied terms: express terms are the terms agreed by the parties; implied terms are contractual terms not agreed by the contracting parties. ! Please note that the similar phrase contractual clause in English is not a synonym of term. We use clause or contractual clause to refer to the specific numbered provisions of a written contract. In documents, the phrase terms and condition is often used to indicate all the terms (provisions) of the agreement. In English contract law there is a basic distinction between two classes of terms (both implied and express terms may be either conditions or warranties: conditions - they are the fundamental terms of the contract, the essential terms; warranties - these are the minor terms of the contract, non-essential terms. This distinction is very important in case of breach contract. If one party beaks the contract (that is, fails to perform some of its obligations under the contract, called breach of contract or non-performance), different remedies are available to the innocent party, depending on whether the term broken is a condition or a warranty: if the party in breach has broken a condition, it is called fundamental breach of contract and gives the right to the innocent party to rescind the contract, in addition to damages. Alternatively, the innocent party may decide to affirm the contract (in this case it will continue in force) and recover damages for the breach; if the party in breach has broken a warranty, the innocent party may claim damages. A contract is discharged when it is terminated: the contractual obligations are extinguished.

The Parties to the Contract The parties to the contract (or contracting parties) may be: natural persons; juristic persons - entities possessing legal personality (in the common law system, they are called corporations). Both natural persons and juristic persons are legal persons (sometimes the term legal person is used to indicate artificial persons, as opposed to natural persons). A corporation is a distinct legal entity, separate from such persons as may be members of it, and having legal rights and duties and perpetual succession. A corporation may be created in English law in a variety of ways, including by international treaty, but the most common means of incorporation (creating a corporation) is by registration: incorporated companies are registered following a procedure regulated by legislation: a corporation sole consists only of one member at a time, the holder of a particular office, such as a bishop or the Sovereign - the office continues without interruption even when the individual holder changes (e.g. on the death), since corporations have perpetual succession; a corporation aggregate consists of a number of persons, as is the case for incorporated companies. Corporations have full legal powers and legal liability for both torts and crimes. Companies and other corporations may enter into contracts, through authorised persons, in the same way as an individual. No special formalities are required because a contracting party is a corporation.

Part One – Discharge of contract The discharge of contract is the termination of the contractual obligation (in the legal language, discharge means release from an obligation, e.g. discharge from a debt or liability). A contract may be discharged in various ways: d. by performance - where the parties perform the contract, fulfilling their contractual obligations, the contract comes to a natural end; d. by express agreement - where the parties agree to extinguish remaining obligations; d. by breach (anticipatory or fundamental breach) - where one party does not fulfil its side of the contract; d. by frustration of contract - where, after the formation of the contract, some event beyond the control of the parties makes it: impossible to perform the contract (impossibility of performance); illegal to perform the contract (illegality); prevents the main purpose from being achieved (failure of main purpose).

Discharge of contract A contract for services is a contract for the performance of work on an independent, freelance basis. In such case, A is the principal, and B is an independent contractor. Payment for services is called a fee. It differs between an employment contract – known as a contract of service – which is between an employer and an individual (employee) who then becomes employed by the company. Payment earned for such work is called a wage (paid on a weekly basis) or salary (monthly). The seller is in breach of contract; it is a case of anticipatory breach: by selling the car to C (a third party), A has indicated his intention not to perform his side of the contract. B can treat the contract as discharge and immediately sue A for damages. The object of the contract (the goods) no longer exists. It is therefore impossible to perform the contract, since the goods were unique and cannot be substitued. The contract is frustrated by impossibility of performance. Because of an external event, the outbreak of war, the contract has become illegal. It is discharged by frustration for illegality.

Frustration of contract and force majeure So, what’s the difference? When it comes to getting out of contracts, in general terms, the law does not allow a party to simply “get themselves out of a bad bargain”, and unanticipated events do not generally allow a party to get out of a contract, or avoid contractual obligations. It effectively will boil down to the contents of the contract, and the nature of the obligations entered into between contracting parties. Two common ways to get out of a contract are through frustration and force majeure events. For an overview of both options, see below . . .

Frustration of contract Force majeure A contract is frustrated (and terminated automatically) when an event occurs that makes the contract simply impossible to perform, or the obligations become fundamentally or radically different to those originally undertaken. A contract is not easily frustrated though, and doesn’t provide any protection for those contracts that were always going to be nigh on impossible to perform. The crucial factor in trying to establish whether frustration applies to a contract is to identify the parties’ contractual obligations at the date of the contract, and how the particular event in question alters them. Force majeure is a contractual term, and what qualifies as a force majeure event depends on the contract. For that reason, a force majeure clause often has some examples of events that fall within its scope and a catch all provision such as “any event beyond the control of the parties”. The general category of legal event covered in this clause is: ‘any cause beyond its reasonable control’. Examples of common events usually listed in contracts as force majeure events include: war, strikes, change in legislation and so on. The party relying on the force majeure clause must generally show that: the event occurred; it was outside its control; it prevented or delayed its performance; it did its best to mitigate its effects.

Part Two – The key elements of an English contract: formation Form and formalities In English law, no particular formalities are generally required to form a contract. A simple contract may be oral or in writing, or it may be concluded by conduct. Some types of simple contract must, however, be made in a particular form to be valid. In the case of contract of employment, an employee must receive written particulars of his or her employment, even if the actual contract need not be in writing. It is possible to make a contract in a special written form, called a deed; a deed is not a simple contract. By law, certain contracts must be stipulated in this form: for example, when buying real property, such as a house. The main elements required to form a contract in English law are agreement , consideration and intention to create legal relations. Offer and acceptance are also necessary elements and these are significant in determining when the contract is formed.