To form or make a contract valid To make a contract partly To change or add to a contract

Or wholly invalid

breach enter into modify renew sign terminate

Verb formsComplete

the box.

as

contract exists.

3 The

by

4 'Evergreen

unless the

6 The

contract

Word formationComplete this the correct abstract noun form.

Underline the stressed syllable more than one syllable.

to

1 enforceable /

2 /

the

...contract

Verb Abstract noun

renew r-enewoJ,

draft

include

omit

terminate

encrypt I

adopt

negotiate

propose

transact

Contractsr:emedies

n9 1: I on

The concept of damages is central to the topic of contractremedies,Damagescan be

defined as 'money awarded by a court in compensation for loss or injury', The term should

not be confused with the word damage, which means 'loss or harm which is actionable

in law',

1 Read the first two paragraphs of the text. Which of the key terms in the second

paragraph is a synonym for damages?

2 Read through the whole text quickly and decide whether these statements are

true or false.

1 According to the foreseeability rule, damages are awarded when it can be

proven that harm or injury could have been seen or known in advance by the

breaching party when the agreement was made.

2 Reliance damages are recovered when the breaching party is forced to give

up profits it acquired under the breached contract.

3 Exemplary damages are collected from the breaching party as a kind of

punishment for particularlyobjectionable behaviour.

,

fixed

the

known as

s:

3 Match these types of damages (1-7) with their definitions (a-g).

1 expectation damages / 'benefit of the bargain' damages a compensation agreed upon by the parties

and set forth in the contract that must be

paid by one or the other in the event that

the contract is breached

b compensation determined by the amount

of benefit unjustly received by the

breaching party

c compensation for losses which are as a

result of special facts and circumstances

relating to a particular transaction which

were foreseeable by the breaching party

at the time of contract

d compensation which seeks to put the

non-breaching party in the position he

would have been had the contract been

performed

e compensation for a loss that is the

natural and logical result of the breach

of contract

f compensation which is imposed by the

court to deter malicious conduct in the

future

g compensation necessary to reimburse the

non-breaching party for efforts expended

or expenses incurred in the reasonable

belief that the contract will be performed

2 general/actual damages

3 liquidated/stipulated damages

4 reliance damages

5 restitution damages

6 special/consequential damages

7 punitive/exemplary damages

4 What types of damages are distinguished in your jurisdiction? Write the

equivalent names in the list in Exercise 3. Unit6 Contracts:remedies

E

2: q

The following text is an excerpt from a contract forms book typically consulted by lawyers

when drafting a contract. Itis an introduction to the concept of liquidated damages. It

also provides information about the elements of a liquidated damages clause, issues

relevant for enforceability, and how the courts tend to rule in such cases.

5 Readthe first paragraph. Howare liquidated damages clauses defined?

6 Read through the whole text quickly. Then match these headings (a-d) with the

sections they belong to (1-4).

a Liquidated damages provisions distinguished from penalty clauses

b Relationship between the stipulated amount and the damages sustained

c Components of a liquidated-damages clause

d Definition of liquidated damages

Contractual remedies:

Liquidated damages

1),'.., ,

When parties enter into a contract, they often

wish to calculate the damages which would

arise for one or both of the parties in the event

that there is a breach of contract by the other

party. Provisions in a contract stipulating the

amount required to compensate an injured

party in the event of a breach are referred to as

'liquidated damages' clauses. The purpose of

liquidated damages clauses is for the nonbreaching

party to avoid the costs which arise

in the difficult task of proving the amount of

the loss actually incurred. Such clauses are

enforceable where they are carefully drafted to

compensate the non-breaching party for the

loss caused by the breach.

2)" ,..........

A contractual party may, in certain instances,

try to make certain that the other party

performs its contractual undertakings by

including provisions which, in reality, constitute

a penalty for failure to perform. In contrast to a

liquidated damages clause, a penalty clause is

not intended to cOmpensate the injured party

for anticipated loss arising fmm the breach. On

the contrary, the purpose of p~nalty provisions

is to serve as a det~rr~nt to breach in that it

prc)\Tid~sfor dalnages which. the parties know

e%8'.tellfdar. beyond that which would normally

tl1enon,-br.eaching party for its

In many jurisdictions, the will sever the

penalty clause from the contract, h6ldingit to

be unenforceable as a penalty. Th~J:'esult is that

the non-breaching party is forced to prove its

loss in accordance with the general principles

of contractual remedies. In light of the above, it

is crucial when drafting a damages clause that it

contains the elements of an enforceable

liquidated damages clause as opposed to an

unenforceable penalty.

3)..............

Historically, an enforceable liquidated damages

clause will include the following elements:

a) the anticipated damages from the relevant

breach are uncertain in amount or difficult

to prove;

b) an intent by the parties to determine the

damages in advance; and

c) a stipulated amount which is reasonable, not

considerably disproportionate to the

presumed loss or injury.l

The recent tendency of the courts is to give

less or no weight to the subjective intent of the

parties. Instead, the courts take into

consideration all three elements, together with

other factual circumstances, such as the relative

bargaining power of the parties, to determine

the reasonableness of the clause at issue.

The primary issue for the court to decide is

that of reasonableness of the prescribed amount

of damages in proportion to the presumed loss

for the non-breaching party. As such, the court

1 Elements a) and c) are apparently contradictory. However, in practice, precedent determines

what amounts to a penalty clause, and lawyers take this into account when drafting contracts.

,

must assess whether the fixed amount is a

realistic attempt to calculate the actual damages

which may result from the breach, or whether

the amount represents a penalty the nonbreaching

party is attempting to impose on the

breaching party.

4).., '......

The courts generally look to the time of

cOlltract in detexmilling the reasonableness of

the damages set forth in it. Consequently, the

actual loss incurred is immaterial, provided the

dJ,l1:lages at the time of contract represent a

reasonable prediction. Of course, the breachiIlg

party has a very difficult argument to make

regarding unreasonableness where the predicted

amount is close to the actual loss.The Uniform

Commercial Code in the United States, in

contracts for the sale of goods, permits

liquidated damages clauses which prescribe

amounts reasonable considering the actual loss.

In rare cases, where the non-breaching party

incurs no actual damages, the courts will not

enforce a liquidated damages clause.

7 Decide whether these statements are true or false.

1 A penalty provision is included in an agreement in order to compensate the

non-breaching party for anticipated losses resulting from a breach.

2 Courts will generally strike down a penalty provision, leaving the injured party

no further means of recovering damages from the breaching party.

3 Recently, courts have tended to place little importance on the intentions of

the contracting parties when reaching decisions concerning liquidated

damages.

4 The court's decision whether the stipulated damages are intended as a

penalty or not depends largely on the reasonableness of the amount.

S Do you have an equivalent to the Uniform Commercial Code in your

jurisdiction?

9 Find words or phrases in the text which match these definitions.

1 failure to perform provisions of a contract without a legal excuse (section 1):

b , " of c..,..,.., , ,

2 to pay damages to the person harmed (section 1):

c "..,..".., an L..,.., , p, , , ,....

3 the relative strength to influence the setting of contract terms (section 3):

b,.." " ", p, " " ",....

4 the part of the contract in question (section 3):

c, , ".. .., at i , , , ,

1: "9 io

Unit 6 Contracts: remedies

E

10Underline phrases referring to the actions and rulings of the court in the text

on pages 80-81.

11Decide which of these verbs can be used in place of the underlined words in

the box on page 81. Is the meaning the same as the original phrase or does it

change?

agrees is hesitant to

is unwilling to

12The concept of liquidated damages can be found in jurisdictions allover the

world. However, the practice of the court striking down a penalty provision is an

approach followed mainly in Anglo-American countries, and is not characteristic

of every jurisdiction. What is the practice in your own jurisdiction? You may

need to research this information.

overturned rejected reversed rules

. nl 1: h

Remediesfor breach of contract and their enforcement differ from jurisdiction to

jurisdiction. Youwill hear a law student talking about a type of remedy in Denmark as

part of a university seminar on contract remedies in Europe.

13~ ~ Listen to the first part of the student's talk. Decide whether these

statements are true or false.

1 Specific performance means that the breaching par~y is ordered to fulfil the

original obligations of the contract.

2 Specific performance can be applied in all breach of contract cases.

3 There are four types of cases where specific performance can be applied.

14~ ~ Listen to the rest of the talk and complete the notes about the five

situations where specific performance can be applied, using no more than

three words in each space.

1 Goods already........................

2 Goods procured from .....................

3 Only a is needed

4 Involves of pledged security

5 When breaching party needs to be stopped from performing

on non-breaching party

acts

2: ng on

The speaker in the previous

making information

listening to

back to

know this, and

paraphrase) in

,

15Read this excerpt from the transcript of the law student's presentation.

Underline important words that are repeated more than once, as well as any

paraphrases of ideas which serve to repeat a previous idea.

ng 1:

16Prepare a brief talk on an aspect of contract remedies in your jurisdiction.

Make use of repetition and paraphrasing to reinforce important ideas and

make them easier for your listener to understand and remember. You should

structure your talk in three distinct sections and give a brief overview of the

points you will cover.

3: n ng c

The liquidated damages clause below is part of a construction industry agreement.

17Read the clause and answer these questions.

1 Why do you think such clauses would be of particular importance in the

construction industry?

2 What does the legal expression time is of the essence in the first line

mean?

3 How much would the owner be entitled to receive as damages if the work

were not completed in ten days as agreed, but rather in 15 days?

4 In the event of a breach of this clause, how will the owner receive

compensation?

FAILURE TO FINISH THE WORK ON TIME

It is mutually agreed by and between the parties hereto that time is of the essence and that

in the event of the Contractor's failure to complete the contract within the time stipulated

and agreed upon, the Owner will be damaged thereby; and because it is difficult to

definitely ascertain and prove the amount of such damages, inclusive of expenses for

inspection, necessary traveling expenses and other similar expenses, it is hereby agreed

that the amount of such damages shall be the liquidated sum ofTwo Thousand Dollars

($2,000.00) per calendar day for each day of delay in finishing the Work in excess of the

number of working days prescribed; and the Contractor hereby agrees that such sum shall

be deducted from amounts due the contractor under the contract or, if no amount is due the

Contractor, the Contractor hereby agrees to pay to the Owner as liquidated damages, and

not by way of penalty, such total sum as shall be due for such delay, calculated as aforesaid.

Unit 6 Contracts: remedies

~

18For each of these words, find the italicised word or expression in the clause on

page 83 that most closely matches its meaning.

1 in the form of

2 specified in writing

3 more than

4 jointly

5 is owed to

6 including

7 as stated above

8 subtracted from

ni 2:

In the following dialogue, an attorney, Mrs Hayes,is consulted by a client, Mr Anderson,

who has been having difficulties in connection with a contractual agreement. In order to

establish the facts of the case, the attorney asks a number of questions. She also informs

the client about the various remedies which may be available to him.

19~:;: Listen to the first part of the lawyer-client interview. Why couldn't the client

deliver the website to the customer on time?

20~:;: Listen to the second part of the interview. What is the lawyer going to do

next?

21~:;: Listen to both parts again and tick the questions asked by the lawyer.

1 Did they not deliver on time or did they deliver something that didn't work?

2 What are some of the features of the website you designed?

3 Did you draft the contract yourselves or did you engage an attorney?

4 Were you able to deliver your website on time?

5 Did you get in touch with anyone besides your cousin, say,

another programmer here in town?

6 How much do programmers get paid per hour in New York?

7 Did they know what your deadline was?

8 Do you expect to lose the customer as a result of this?

22Choose the correct answer to each of these questions.

1 What was wrong with the software program delivered to the client?

a It was completed too late to meet the deadline.

b It didn't work on all of the ferry company's PCs.

c It wasn't designed in accordance with the specifications of the client.

2 According to the lawyer, what should her client have done to mitigate his

damages?

a He should have offered his customer less than a 10% discount.

b He should have looked for a cheaper local programmer.

c He should have had an attorney draw up the contract.

3 Provided the contract doesn't waive the right to consequential damages, under

which circumstances might the client be entitled to receive such damages?

a If the reputation of the client in his town suffers

b If the quality of the software turns out to be unsuitable for the purposes

of the customer

c If the loss of the customer and the necessity to grant a discount could

have been foreseen

,

4 Why can't the client expect to be awarded punitive damages?

a Weight gain does not qualify as emotional injury.

b Punitive damages are not awarded in a breach of contract case of this type.

c The possibility of personal injury was not foreseen in the contract.

23Work in small groups and discuss the case. What do you think would be the

likely outcome?

D

D

D

D

DDDD

: In .

I h c

In the previousdialogue,the attorney conductsa successfulinterviewwith a client. In

suchan interview,the primaryaimsof a lawyerareto establisha goodworking

relationship,to ascertainthe facts of the case,and to developa theoryof the legal issues

involved.Theseobjectivescanbestbe achievedthrough anawarenessof the stagesof a

client interviewand the effective useof questions.

24Completethe spaces(1-5) in the table using these stages in a client interview

(a-e).

a Establishing facts and chronology of events

b Concluding the interview

c Getting an overview of the case

d Identifying issues, developing and supporting a theory

e Introduction

Unit 6 Contracts: remedies

E

n9 2: In

.

I h c e

25With a partner, take turns conducting a lawyer-client interview. Each

of you will play the role of lawyer and question the other about the facts of

a case.

While in the role of lawyer, follow the outline of a lawyer-client interview in the

table above and use the sample phrases provided whenever possible. Take

notes on the information you receive from your client.

When playing the role of client, respond to the questions posed by the lawyer

as best you can, inventing details when necessary. Do not give all of the

information at once; your task is to give your partner practice in posing

questions and gathering information.

Student A: Turn to page 305.

Student B: Turn to page 306.

n9: n n c e

Subsequent to an important meeting or phone call with a client, a lawyer will generally

make detailed notes on what was discussed and agreed upon. These notes may then form

the basis of a follow-up email or letter summarising the contents of the discussion.

26Read the follow-up email on page 87, which was written after the interview you

heard in Listening 2, and answer these questions.

1 What do you think is the purpose of this email?

2 Find one factual mistake and one additional piece of information in the

email. Read the transcript of the interview on page 268 to check your

answers.

3 Underline the phrases which are used to ask the client to provide material to

serve as evidence in the case.

4 Underline phrases referring to the actions and rulings of the court.

,

Dear Mr Anderson

1 As a follow-up to our meeting on June 24 at my office, allow me to summarise what we

discussed at that time.

2 According to the facts as I understand them, you are involved in a contractual dispute with the

software-design company Glaptech concerning work you commissioned in order to fulfil a

contract between you and a ferry company. The agreement that you concluded with the ferry

company states that you would provide them with a website no later than 15 May of this year

which would, among other things, enable customers to book a ferry passage online. Your

contract states that this online booking feature would work for 'all customers using modern

home computers'. You commissioned Glaptech to write a software program for the online

booking feature to be incorporated into the website you designed. However, Glaptech delivered

an unsatisfactory program to you, which contained unnecessary code and was not compatible

with Macintosh computers. As a result, it was necessary to have Glaptech's program rewritten.

For this reason, you requested an extension of three weeks from the ferry company. This

extension was granted to you in exchange for a 20% discount on your work. The programmer you

found to do the repair work charged a higher than normal rate, which meant that the work on the

website as a whole resulted in a financial loss for you. Furthermore, you fear that the fact that

you delivered your work late might result in the loss of a customer as well as damage to your

professional reputation.

3 You requested information from me regarding the recovery of damages. Ifyou do in fact lose a

long-standing customer, there is a chance that you may be able to recover consequential

damages. However, proving that the defendant could have foreseen this loss will be difficult. It

is also unlikely that you will be able to recover the full amount you spent to pay the relatively

high-priced programmer who repaired the faulty program. Since you were obliged to make a

reasonable effort to solve the problem as inexpensively as possible and you found another

programmer without shopping around locally, it might be argued that you did not take sufficient

steps to mitigate your damages. Itwould be necessary for us to show the court that another

programmer would have charged more or less the same as the programmer you hired and would

have done the same quality work. Ifwe cannot do this, you will only be able to recover what a

local programmer would have charged for the work. Nevertheless, it appears that your chances

of recovering the discount that you gave to the ferry company are good, because your contract

with Glaptech does not waive consequential damages. Itwill be necessary to show that

Glaptech could have foreseen that you would have to give your customer a discount if the

program they designed was unsatisfactory and had to be fixed, thus forcing you to deliver the

goods late.

4 While I believe your chances of recovering some damages are good, the amount will ultimately

depend on what we are able to prove in court. The courts in our jurisdiction tend to strictly

construe contracts between commercial parties and are generally hesitant to award

consequential damages unless the plaintiff can clearly demonstrate that the loss was

foreseeable to the defendant. The court will look at the course of dealings between you and

Glaptech, as well as any documentation you can produce which indicates that Glaptech could

have reasonably foreseen the loss.

5 At this stage in the matter, it would be helpful if you could give me any documents or

information which relate to the dispute. Naturally we will require a copy of the contract

concluded with Glaptech. Inaddition, it would be extremely useful if you could provide

documents indicating the nature and extent of your previous business relationship with the ferry

company, as well as anything that would bear witness to the poor quality of the faulty software

program provided by Glaptech.

6 Once I have received the contract from you, I will prepare the complaint, which I should be able

to file within the week.

7 I will keep you informed of the progress of the case. Please do not hesitate to contact me if you

have any questions.

Yours sincerely

Clare Hayes

Unit 6 Contracts: remedies

~

27Match each of these functions (a-g) with the paragraphs (1-7) in the email.

a a summary of the facts of the case

b an outline of actions to be undertaken next

c a discussion of legal issues involved in the case

d a closing line referring to the next contact with the client

e a reference to the day, location and general subject of the interview

f a request for further information or evidence from the client

g an assessment of how successful the case will likely be in court

28Using the notes you have taken and the information included on your role card

in Exercise 25, write an email to the client you interviewed.

ng $

. b h

Different types of breach of contract can be distinguished, among them anticipatory

breach, material breach and immaterial breach.

29This letter of advice deals with a case of anticipatory breach. Read the

first paragraph and underline the sentence that expressly states the

purpose of the communication.

,

30Read the whole letter and answer these questions.

1 In your own words, summa rise the legal issue raised by the case referred to in the above letter by

completing the following sentence:

The issue in the instant case is whether...

2 In your own words, summarise the two options the client has under the law by completing the

following sentences:

The non-breaching party in this case has two options: firstly, ...

Secondly, ...

3 In your own words, say how the reliance principle relates to the case.

Under the reliance principle, ...

31Underline the sentences in the letter which refer to the actions and rulings of the court.

Yl1i~~

To improve your web-based tsearch skills, visit www.cambridge.orgjeltjlegalenglish.click on

Research Tasks and choose Task 6.

Unit6 Contracts:remedies E

Vocabulary: distinguishing meaningWhich word each group is the odd one

out? You may need to consult a dictionary to distinguish the differences

meaning.

repudiate refuse

~ lessen relieve

3 damages compensation

4 option occasion choice

5 reluctant curious hesitant

6 the Court found the CoUrt argUed

reject

reparation

the Court held

Language useComplete the sentences below using the verb phrases

box. In some cases, there is more one correct answer.

arc hcsit:mt to

ruled that

dismissed finding that held that rejected

1 Courts

2 The Court

contract case.

3 The Court

constituted a breach of the parties' agreement, as reflected

policy the company posted on website,

information,

an enforceable

uphold restraints trade.

can be awarded in a

the privacy

Word formationComplete

noun form. Underline the

syllable.

Verb.... .... ....< .. ...jAbstract noun

reme<Ly remedy

breach

intend

reliance

violate

enforcement

reverse

anticipate

computation

perform

.....

with damages and a clause1. Match the verb-noun collocations

verb + damages

Date: 2015-12-11; view: 4226