,,

Contracts: contract formation Key terms: Defences to contract formation

Match th ese defences (1 - 4) with th eir definiti ons (a - d).
1 illega lity of th e subject matter
2 fraud in th e indu ce ment
3 duress
Reading A: Introduction to contract formation 4 lack of lega l ca pacity

a wh en on e party does not have t he ability to enter into a lega l contract, i.e. is not of
This text gives an overview of some of the most important concepts and terminology related legal age, is insane or is a convi ct or enemy alien
to what constitutes a legal contract and when it is enforceable. b wh en on e party induces anoth er into entering into a contract by use or threat of force,
Rea d through th e text quickly. Th en match th ese question s (a-e) with th e paragraphs th at vio lence, economic pressure or other similar means
answer th em (1 -5 ). c wh en either the subj ect matter (e.g. th e sale of illegal dru gs) or th e co nsideration of a
contract is illegal
a What form can an enforceable contract take? d wh en on e party is intentionally misled about th e term s, quality or oth er aspect of th e
b When do third parties possess enforceable rights in a contract?
contractual re lationsh ip that leads the party to enter into the transaction
c On what grounds related to th e formation of a contract may its validity be attacked?
d What are the elements of an enforceable contract?
e What are the essentia l terms of a contract? Text analysis: Understanding contracts
Lawyers are usually involved at the formation stage of a contract, which includes advising,
1 As opposed to civil law, where contracts are genera lly formed simply through offer drafting and negotiating. Drafting is commonly carried out with the help of contract
and acceptance, in the common law 1 a promise becomes an enforceable contract templates or forms. Nevertheless, legal counsel must advise on the inclusion or omission of
when there is not only an offer by one party (offeror) that is accepted by the other clauses and their wording. To do this, familiarity with common clause types and the language
party (offeree) but also an exchange of lega lly sufficient consideration (a gift or typically used in them is necessary.
donation does not genera lly count as cons ideration); hence the equation learned by
3.1 Match these types of contract clauses (1-10) with their definitions (a - j).
law students: offer+ acceptance + consideration = contract. The law regards a
counter offer as a rejection of the offer. Therefore, a counter offer does not serve to
1 Acceleration a clause stating that the written terms of an agreement may not be varied
form a contract unless, of course, the counter offer is accepted by the origina l offeror.
2 Assignment by prior or ora l agreements because all such agreements have been
2 For a promise to become an enforceable contract, the parties must also agree on 3 Confidentiality consol id ated into the written document
the essential terms of the contract, such as price and subject matter. 4 Consideration b clause designed to protect aga inst failures to perform contractua l
Nevertheless, courts will enforce a vague or indefinite contract under certain 5 Force Majeure ob ligations caused by unavoidable events beyond the party's contro l,
circumstances, such as when the conduct of the parties, as opposed to the written 6 Liquidated Damages such as natural disasters or wars
instrument, manifests sufficient certa inty as to the terms of the agreement. 7 Entire Agreementl c clause outlining when and under which circumstances the contract may
3 An enforceable agreement may be manifested in either written or oral words 8 Severability be terminated
(an express contract) or by conduct or some combination of conduct and words
9 Termination d clause concerning the treating of information as private and not for
(an implied contract). There are exceptions to this rule. For example, the Statute of 10 Payment of Costs distribution beyond specifica lly identified individuals or organ isations, nor
Frauds requires that all contracts involving the sa le of real property be in writing. used other than for specifica lly identified purposes
e clause in a contract requiring the ob ligor to pay all or a part of a payable
4 In a contractual dispute, certa in defences to the formation of a contract may
amount sooner than as agreed upon the occurrence of some event or
permit a party to escape his/ her obligations under the contract. For example,
circumstance stated in the contract, usually failure to make payment
illegality of the subject matter, fraud in the inducement, duress and the lack
f clause setting out which party is responsible for payment of costs re lated
of legal capacity to contract all enable a party to attack the validity of a contract.
to preparation of the agreement and ancillary documents
5 In some cases, individu als/compa nies who are not a party to a particular g clause express ing the cause, motive, price or impelling motive which
contract may nevertheless have enforceable rights under the contract. For examp le, induces one party to enter into an agreement
contracts made for the benefit of a third party (third-party beneficiary contracts) h clause referring to an amount predetermined by the parties as t he total
may be enforceab le by the third party. An original party to a contract may also amount of compensation a non-breaching party shou ld receive if the
subseq uently transfer his rights/duties under the contract to a third party by way of other party breaches a part of the contract
an assignment of rights or delegation of duties. This third party is called the clause prohibiting or permitting assignment under certa in conditions
assignee in an assignment of rights and the delegate in a delegation of duties. clause providing that, in the event that one or more provisions of the
agreement are declared unenforceable, the balance of the agreement
1 It should be noted that , in the United States, contracts for th e sale of goods are govern ed by th e Uniform Commercial
Code (UCC) and in the United Kingdom by the Sale of Goods Act, and therefore the above common law contractua l remains in force
principles may have been supplemented or replaced by these statutory provisions. 1
(US) also Merger (The term Parol Evidence is used in both the UK and the USA.)

Unit 5 Contracts: contract formation ~

 3.2 Add the name of each clause type (or its nearest equivalent) in your language to the
list in Exercise 3.1. NON-COMPETITION AGREEMENT OF SHAREHOLDER OF SELLER IN CONNECTION
3 .3 Identify the type of clause listed in Exercise 3.1 exemp lified by each of these clauses. WITH SALE OF ASSETS
II I
COVENANT NOT TO COMPETE
1 The se ller's liability for damages shall in no case exceed th e purchase price of the
particul ar quantity delivered with respect of which damages are claimed. This COVENANT NOT TO COMP ETE (this "Covenant"), dated as of , 20 , is
made and entered into by and between ("S hareholder") and ,a
2 Wh enever, within the sole judgment of Seller, the credit stand in g of Buyer shall _ _ _ _ _ corporation ("Purchaser"), with reference to th e following facts :
become impaired, Seller shall have the right to demand that th e remaining portion A corporation ("Seller"), and Purchaser are parties to that ce rtain
of the contract be ful ly performed within ten (10) days. Asset Purchase Agreement, dated as of , 20 (as amended,
supplemented or otherwise modified from time to tim e, the "P urchase Agreement"), pursuant
3 Neither party sha ll be liable in damages or have th e right to term inate th is
to which Purchaser agreed to purchase from Se ller, and Seller agreed to sell to Purchaser, certain
Agreement for any delay or default in performing hereunder if such delay or assets of the business owned and operated by Seller located at _ _ _ __
default is caused by conditions beyond its control including, but not limited to, ("the Business") . Unless otherwise noted , capitalized terms used herein shall have the meanings
ascribed to th em in the Purchase Agreement.
acts of God, government restrictions (including the denia l or cance llation of any
export or oth er necessa ry licence), wars, insurrections and/or any oth er cause B Shareholder owns all of the issued and outstanding capital stock of Seller.
beyond the reasonable control of the party whose performance is affected. C Shareholder, during the course of ownership and operation of the Business, has acquired
4 This Agreement may not be assigned without the prior written consent of the other numerous business contacts among th e public, financial institutions, and industry
employees.
party, except that Buyer may assign the Agreement to a subsidiary or related
corporation so long as the owners of at least seventy-five per cent (75%) of the D Purchaser shall expend a considerable amount of time, money, and credit with respect to the
purchase and operation of the Business.
stock of such corporation are either Buyer or the shareholders of Buyer.
5 In the event Operator defaults in the performance of any covenant or agreement E Purchaser does not desire to expend such time, money, and credit and then subsequently
compete with Shareholder in the business of _ _ _ __
made hereunder, as to payments of amounts due hereunder or otherwise, and
such defau lts are not remedied to the Supplier's satisfaction within ten (10) days F It is a condition precedent to the closing of the transactions contemplated by the Purchase
Agreement ("the Closing") that Shareholder execute and deliver this Covenant and that
after notice of such defaults, the Suppl ier may thereupon term inate th is
Purchaser pay Shareholder certain amounts at Closing, all as more fully described below.
agreement and all rights hereunder of the Operator but such termination sha ll not
affect the obligations of the Operator to take action or absta in from taking action THEREFORE , in consideration of the foregoing and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows :
after termination hereof, in accordance with this agreement.
1 For a period of years from the date hereof, Shareholder shall not have any
6 This Agreement, including the Schedules and Exhibits attached hereto, constitutes controlling ownership interest (of record or beneficial) in , or have any interest as a director,
and conta ins t he entire agreement of the parties with respect of the subject matter principal executive officer, key employee, agent or consultant in , any firm , corporation ,
hereof and collective ly supersedes any and al l prior negotiations, correspondence, partnership, proprietorship, or other business that engages in any of the following activities within
a -mile rad ius of the Business's current location [describe].
understandings and agreements between the parties respecting the subject matter
hereof. No party is relying on or sha ll be deemed to have made any representations 2 Additionally, Shareholder shall :
a) not refer prospective purchasers or lessees of in , other than the
or promises not expressly set forth or referred to in this Agreement. Business; and
b) subject to any obligation to comply with any law, rule, or regulation of any governmental
3.4 In your own words, explain these words and expressions in italics from the clauses in authority or other legal process to make information available to the person entitled thereto,
Exercise 3.3. keep confidential and shall not use or permit his attorneys, accountants, or representatives to
1 liability for damages (clause 1) use, in any manner other than for the purpose of evalu ating the transactions contemplated by
the Purchase Agreement, any confidential information of Purchaser which Shareholder acquired
2 within the sole judgment of Seller (clause 2) in the course of the negotiation of the transactions contemplated by the Purchase Agreement.
3 delay or default (clause 3)
3 As consideration for the agreements of Shareholder set forth in Sections 1 and 2 above,
4 prior written consent (clause 4) Purchaser shall , at the Closing, deliver to Shareholder$ by wire transfer of
5 In the event Operator defaults in the performance (clause 5) immediately availabl e funds in such amount to a bank account designated by Shareholder.
6 abstain from taking action (clause 5) 4 The term of this Agreement shall be months, commencing on the date hereof.
7 Schedules and Exhib its (clause 6)
5 In the event that any provision or any part of any provision of this Agreement shall be void or
8 sha ll be deemed (clause 6) unenforceable for any reason whatsoever, then such provision shall be stricken and of no force
and effect. However, unless such stricken provision goes to the essence of the consideration
bargained for by a party, the remaining provisions of this Agreement shall continue in full force
Reading B: A covenant and effect, and to the extent required , shall be modified to preserve their validity.
6 In the event of any litigation or legal proceedings between the parties hereto, the non-prevailing
The text on the next page is an example of the previously mentioned type of document known party shall pay the expenses, including reasonable attorneys' fees and court costs, of the
as a contract form, which is often used by lawyers at the formation stage of a contract. prevailing party in connection therewith .
Agreed to as of this day of , 20_ _ __ _
4.1 Briefly scan the agreement and answer these questions.
SHAREHOLDER PURCHASER
1 What kind of agreement is it?
By _ __ _
2 Why does the text have gaps in it?
Its _ _ _ __
4.2 Read the agreement more carefully. Wh at types of clauses are 2b, 3, 5 and 6?

~ Unit 5 Contracts: contract formation

4.3 Find t he verbs, ita licised in t he text, wh ich match t hese definitions (1- 7). 6.1 ~ ~ Listen to t he f irst part of an excerpt from a sem inar held at a law firm for some of
t he fi rm's rece nt ly hired yo un g lawyers and t ick t he topics t hat t he speaker will cover.
1 t o follow
2 will be taken out 1 preparin g for a negotiation D
3 given to 2 ph rases and expressions for negoti ators D
4 beginning 3 using agreement templates and term sheets D
5 has bought 4 classic 'tricks' used by negotiators D
6 envisaged in 5 genera l negotiatin g techniques D
7 will spend 6 dea ling with obj ections from the other sid e D
1 different types of agreement usually encountered D
8 recognising a good dea l D
Speaking A: Paraphrasing clauses 9 rol e-plays D
6.2 ~ ~ Listen to the second part of th e seminar and an swer these questions.

To paraphrase means to express something in your own words. The fo llowing 1 Wh at two things does th e speaker say must be co nsid ered wh en usin g contract
phrases may help you to paraphrase: temp lates in a negotiation?
This clause deals with ... and says that ... 2 The speaker advises negotiators to categorise the issues under discussion into
According to this clause, the parties agree to ... four types. What categories does he suggest?
This clause regulates ... 3 What do you think the speaker means by horse-trading?
It simply says that ... 4 What is the speaker's advice concern ing clauses in an agreement which the other
This is about what happens when ... party prom ises not to enforce?
In such a case, .. .
Here it says ... , which means that ...
This part basically just says that .. .
Language use A: Giving emphasis

Working with a partner, take turns paraphrasing the contents of each of the clauses (1 - 6) An experienced speaker will make use of phrases which highlight the importance
in the agreement on page 67. Explain the contents of the clauses as if you were speaking of an idea before it is presented . For example, the speaker in Listening A uses the
to a client with little knowledge of the law. fo llowing phrase to point directly to important information:

It's Important to realise that negotiating with a contract template means that it's
necessary to review the terms and conditions it contains carefully.
Listening A: Negotiating
Th is phrase can be emphasised further by the use of such adverbs as particularly
The contract formation process typically involves negotiating the terms and conditions of the or especially.
agreement. Negotiating can be carried out face to face and/or in writing, with the use of
It's particularly I especially important to realise that negotiating with a contract
both contract templates, as seen in Reading B, and term sheets. A term sheet is a document
template means ...
listing the terms and conditions of a business agreement. During the negotiation phase, it
can be used by the parties as a guide; after negotiations, it often serves as the basis for the A speaker would give these adverbs greater emphasis by making them louder,
final agreement. longer and higher in pitch.

While a great deal of the negotiating process takes place today via email, face - to -face The beginning of the second part of the seminar contains several other examples
negotiating continues to play an important role. Undoubtedly, the ability to negotiate well in of phrases that can be used to give emphasis to a point, in speaking as well as in
English depends to a large extent on experience. However, negotiating skills can be improved writi ng.
by learning about how negotiations are generally conducted and which techniques are
employed by good negotiators.
Loo k at the first two paragraphs of the transcript of the second part of the sem in ar on
Page 283 and ,underline the phrases used for giving emphasis to a point. Which of them
can be made stronger by adding the adverbs mentioned above?

Unit 5 Contracts: contract formation 69

'0
 A junior colleague of yours who attended the in-company seminar on effective contract
Writing A: An informative memo negotiations [Listening A) was asked by your superior to draft a memo for the other
,,, non-senior members of staff who were not present at the talk. He was told to summarise the
A memo is a formal text type used, for example, to outHne or clarify a point of law or to three most important points raised by the speaker, particularly those made in connection
provide a brief opinion on a case. Memos can be external [e.g. to a client) or internal with the careful use of contract templates and term sheets. The junior colleague has asked
[e.g . to another lawyer in the same firm). In either case, a memo serves to circulate you to review his memo before he sends it.
information that requires the attention of its readers .
8.3 Before you read your co lleague's memo, review the transc ri pt of Listen in g A on
8.1 Match t he halves of these sentences explaining the elements of a memo. page 283 and id entify the points that shou ld be included. Th in k about how you
a refers to any sentences providin g background information would structure t he memo.
1 A head ing
2 The subj ect li ne about the project in question (such as a reference to an event 8.4 Read the memo below and make suggestions for improvement. Use the Writer's
3 The context or to a previous request for information). check list on page 72, paying attention to the overall structu re and cohesion of the
4 In the main message, b individual points shou ld be organ ised in descend in g order of memo, sentence structure and language use. Add phrases for givin g emphasis
5 The action close im portance, i.e. most important ones f irst, subordinate or where necessary. One comment has already been made on the text.
supporting points later.
c is a clea r ca ll to action - an explanation of what sho uld be
done, in what way, by whom and by what date. Memorandum
d includes the co mpon ents Date, To, From and Subject.
e states t he main id ea of the memo in fewer than ten words. To: All non-senior members of the legal staff of the
Mergers & Acquisitions department
8.2 Identify the elements from Exercise 8.1 in this interna l memo.
Subject: Seminar on contract negotiations

Th semina was very informative, and the speaker made

a lot of good points about using templates and term sheets.
Memorandum The speaker told us that we should be careful when using
WWck- ~YIN? ?Yovide-
WIOYe- ~o\A.VId
To: All members of the legal staff of the templates. He said that we should review the existing terms ivcfo\"\\V\Atiovc!
Mergers & Acquisitions department and conditions carefully, and also think about what is missing
from the agreement and should be included . He then said that
From: John Thornton it is a good idea to ask a sen ior attorney who has experience
with the type of agreement you are negotiating to look at your
Date: 10 February 2011 agreement. You should keep good notes of all communications
about the points in the agreement, too, all the information on
Subject: In-company seminar on contract negotiations
the term sheets should be what the parties have all agreed on .
As part of our in-company training programme focusing on Don 't leave any language in the agreement which was originally
professional communication skills, we have arranged for the in the template and which is not appropriate!
well -known communication trainer and practising lawyer,
Mr Tom Boland , to hold a half-day workshop on the topic of
Best wishes
Successful Contract Negotiations. Lyd ia Brown
We would like to invite all members of the legal staff in the
department to attend this workshop, which will take place on
27 February, 9-11.30 a.m ., Conference Room 12.
The workshop consists of a theoretical part, followed by practical
role-p lays offering an opportunity for negotiating skills training
and personal feedback from the trainer. Thus it is imperative that
you arrange your schedu les so that you can be present for the
entire workshop.
Please let me know by 9 a.m. on Monday, 14 February by email
(j.thornton@ lawfirm.com) whether you can attend.
J. Thornton

Unit 5 Contracts: contract formation ~

 Writer's checklist Listening 8: Contract negotiation
I I STRUCTURE, CONTENT, COHESION
Lawyers are common ly requested to conduct contract negotiations on behalf of clients,
• Is there a clearly written and easily recognisable statement of the main purpose or subject particularly in matters in which strong negotiating skills are required. You are going to hear Arthur
of the text? Johansson, a junior lawyer who attended the in-company seminar on negotiating techniques,
• Is sufficient background information provided, i.e. is the subject of the text put into context? negotiating the terms of an agreement for a client with the other party's lawyer, Ms Orvatz.

• Are the paragraphs arranged logically? Is the most important point stated first? Are further 9 .1 ~ ~ Listen to the negotiation and answer these questions.
points listed in descending order of importance? 1 What kind of agreement are they ta lking about?
• Does each paragraph of the text have one main idea? 2 What kind of business does it involve?
• Are any of the paragraphs too long? Would the text be easier to understand if these 3 Which clauses do they mention?
paragraphs were broken down into shorter ones? 4 What problem does the franchisee have with the contract?
• Are transitional words and phrases used effectively to lead from one idea to the next, from 9.2 ~ ~ Listen again and decide whether these statements are true or false.
one paragraph to the next? (For example: consequently, on the other hand or secondly.) 1 The clause they are discussing would not all ow the franchisee to operate any kind
• Are evidence and examples provided to illustrate and support the points made? of restaurant within the prescribed area for a stipulated period of time.
• Does the text end with a clear call for action so the reader knows what he or she is 2 The lawyer representing the franchisor argues that the purpose of the clause is to
expected to do? guard her client's legitimate business interests.
3 The franchisee's lawyer believes that his client is in a strong position in the
SENTENCE STRUCTURE negotiation.
4 The franchisee's lawyer offers to strike the arbitration clause in exchange for a
• Is there sufficient variety in the way sentences begin?
red uction in the number of years set forth in the non-competition clause.
• Are various sentence types used: simple (one independent clause and no dependent
9.3 What do you think of the way Arthur Johansson negotiated th e agreement? Did he
clauses), compound (two or more independent clauses, joined by a conjunction) and
use any of th e techn iques presented at the negotiation seminar?
complex (at least one main clause and one subordinate clause)?
• Are there any sentences that are too long to be understood easily? Can they be made
shorter or broken up? language use 8: Negotiating expressions
• Are parallel ideas expressed in terms that are grammatically parallel? (For example:
In addition to learning about techniques employed by experienced negotiators, improving
instead of The contract outlines your rights and what you are obliged to do,
your negotiating ability in English can be achieved by becoming familiar with and using
write: The contract outlines your rights and obligations.) common phrases.
• Are there any sentence fragments, i.e. sentences without a subject and main verb?
In one of the initial phases of a negotiation, the bidding phase, the two sides put forth
LANGUAGE USE proposals or suggestions. The phrases in Exercise 10 .1 serve to introduce a proposal or
suggestion, or to respond to such a proposal in a face -to -face negotiating session . [Note that
• Are any words misspelled? (Check the words you know you tend to misspell.) th ese phrases would also be suitable for use in informal written communication, such as an
• Do the subject and verb in every sentence agree in number? (For example: The reasons email, between parties with an established and friendly working relationship.)
why the claim has been filed are ... is correct and not is, because the subject is plural.)
10.1 ~ ~ Listen to the negotiation in Listening B again and tick the expressions you hear
• Are any words or phrases inappropriate in style, in particular, too informal? the lawyers use.
• Have any words been repeated too often where synonyms or pronouns could have been
used instead? 1 I'm afraid we can't go along with ... 0
• Is it always clear what words like it, he, they, this refer to?
2 I'm afra id that's out of the question. 0
• Is the use of tenses consistent? (For example: are there unjustified shifts from the present
3 Our proposal is to ... 0
to the past, or from present simple to continuous?)
4 That's certa inly a step in the right direction. 0
5 We suggest ... 0
• Are the following words used correctly (not mixed up): there/their/they're, its/it's, to/too, 6 That would be difficu lt for us. 0
your/you're? 7 We'd li ke .. . 0
8 What we're looking for is ... 0
9 I th ink we could live with that. 0
10 We're not entirely happy with that. 0
11 We'd be happy with that. 0

Unit 5 Contracts: contract formation ~

10.2 Decide whether each of the phrases in Exercise 10.1 is used to a) make a proposa l,
b) respond favourably, or c) reject a proposal. Which phrase is the most forcefu l for 17.3 Franchisee covenants that, unless otherwise approved in writing by Franchisor,
rejecting a proposal? Franchisee shall not, for a continuous uninterrupted period commencing upon the
expiration or termination of this Agreement (regardless of the cause for termination),
OM
~v and continu ing for two (2) years thereafter (and in the case of any violation of this
Speaking B: Negotiating an agreement covenant, for two (2) years after the violation ceases), either directly or indirectly, A ~<:>it wovd~- ->"'""
for himself, or through, or on behalf of, or in conj unction with any person, pa- r-tn- e"-'-rs.__,h.--,-ip-,- ~"~~~L<o>i~
Ro le-play t his situation with a partner. Use as ma ny of t he phrases for negotiating from corporation , limited liability company or other entity, own, operate, maintain, or
~~~ to " llow c-lit-l't
Exercise 10.1 as yo u can. engage in, be employed by, or provide assistance to, or have any interest in (as to ~ve- 'p......ive- il'tue,.;t.;' -
owner or otherwise) any business that: (a) offers products or services wh ich are o>lwt<ld.,'t o>top "-im fvom
k:>~i~ .;~ve,.; ;., .;i,.,il"v
Student A: Turn to page 301. the same as or similar to the prod ucts and services offered by the Franchised W""f""-"'ie,.; ;., w"-ic-k u ~
Student B: Turn to page 302. Business under the System and (b) is, or is intended to be, located at or within a w ;.,fiL<e-..u ""' de-c-io>io.,.;.
. twenty-five (25) mile rad ius of the Approved Location or of any other Franch ised
10-mt1t-
Business under the System.
Reading C and Writing B: Adapting a contract template
As discussed previously in this unit, the use of templates in the contract formation stage can
make the task of drafting a contract easier, but it also requires care and thought. In some 12 .2 With a partn er, summ ari se what th e above cla use says in everyd ay language, as
you did in Spea king A in this unit. Wh at changes did you make in word choice and
cases, it will only be necessary to fill in the blanks of the template, while in others, additions
se ntence stru cture?
are made and rewriting must be done. The following email, written to Arthur Johansson, the
junior lawyer who carried out the negotiation in Listening B, deals with the contract he 12.3 Write the email to the client as requested by Randell , referrin g to the attached
negotiated with the legal representative of a franchisor. reworked clause and explaining what it mea ns. Look at Section 9 (Understand ing
lega lese) in Unit 3 for guida nce on simplifying t he style of language used in th e clause.
12.1 Read th e email f rom Arthur's superior and answer th ese question s.
1 What does he want Arthur to do?
2 What does he mean by walk him through it?
Unit 5
3 What do you think COB means?
To improve your web-based research sk ills, visit www.cambridge.org/elt/i le2, click on Research
Tasks and choose Task 5.

lcompose mail ) I (( Back to lnbox Archive J Report spam) Delete J Label ) Move to.,.) r More .,.

~ (2) +, ~ -+Forward
Drafts
Sent
Trash (1)
Outbox Hi Arthur
Fo lder
Good to hear that you've made some progress on the franchise agreement for our client.
1 guess that those in-company seminars on negotiating tactics were really worth it.
In any event, I've taken a look at the franchisor's non-compete clause from their standard
contract template. I've made some notes in the margins of the clause, scanned it, and
attached it to this message. The important thing is to change the time and scope of the
restrictions in accordance with my notes.
Please rewrite the clause, including all of my notes, and send it back to me.
Since our client is particularly concerned about the non-compete clause , I would
also ask you to explain it to him in writing. Please send him an email with the reworked
clause, tell him about the changes made, and just walk him through it in plain language,
if you would .
It would be great if you could send the email off to him before COB today.

Best
Randell

Unit 5 Contracts: contract formation ~

 4 Word formation Complete this tab le by filling in the correct abstract noun form.

' •' Language focus Underline the stressed syllable in each word with more than one syllable.

1 Vocabulary: distinguishing meaning Whi ch word in each group is the odd one out? Verb Abstract noun
You may need to consult a dictionary to distinguish the differences in meaning. renew Yel'\eW~

1 agreement ~ covenant contract draft

2 shou ld in the event if whereas inclu de
3 consent authorisation injunction permission omit
4 withdraw breach cancel rescind term inate
5 deleted taken out unwarranted removed
encrypt
6 contention proposition proposal suggestion
in effect adopt
7 valid efficacious enforceable
negotiate
2 Collocations Complete the table below using these verbs, which all collocate with the
propose
noun contract.
tra nsact
~ cance l enter into execute modify rescind sign supplement
term inate 5 Vocabulary: antonyms Write the opposite of each of the adjectives used to describe a
contract.

To form or make a contract valid To make a contract partly or To change or add to a contract 1 enforceable I ~ff?.~~!l!- contract
wholly invalid 2 implied I ............ contract
3 binding I ............ contract
4 valid I ............ contract
6 Prepositions Complete the contract clause below using the prepositions in the box.
What type of clause is it?

3 Verb forms Complete the sentences below using the correct form of the verbs 1-eetweeA by by for hereby herein in
in the box.
Th is agreement constitutes the entire agreement 1) '?.~~~ the parties.
I breach @nt@r into modify renew sign terminate I No waiver, consent, modification or change of terms of this agreement shall bind
either party unless in writing and signed 2) ............ both parties. Such waiver, consent
1 Minors and the mentally incompetent lack the legal capacity to M'l-tt?<'(.in-ta contracts. modification or change, if made, shall be effective on ly 3) ............ the specific instanc~
2 Courts generally rule that if the parties have a meeting of the minds and act as and 4) ............ the specific purpose given. There are no understandings, agreements
though there was a formal, written and ............ contract, then a contract exists. or re presentations, oral or written, not specified 5) ............ regarding this agreement.
3 The lawsuit claimed that the defendant ............ a confidentiality contract by Contra ctor, by the signature below of its authorised representative, 6) .......... ..
attempting to sell trade secrets as his own inventions. acknowledges that the Contractor has read this agreement, understands it and
4 'Evergreen clauses' are those clauses which cause automatic renewal unless the agrees to be bound 7) ............ its terms and conditions.
contract ............ .
5 While fixed-term contracts involve an agreement that the job will last for a specified
period of time, provisions are often included to enable the contract ............ if so
desired .
6 The committee shall have no authority to change or otherwise ............ contract
language.

Unit 5 Contracts: contract formation ~