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The law of contract

Here is a brief summary of the law of contract. Complete the texts using the words in the box.

agreement breach capacity consideration damages fraud

illegal obligation oral performance property signed terms

What is a contract?

It is an agreement that creates a binding (1) obligation upon the

parties. The essentials of a contract are as follows: mutual

(2) ________; a legal (3) ________, which in most instances

need not be financial; parties who have legal (4) ________ to make

a contract; absence of (5)________________ or duress; and a subject matter

that is not (6)________________ or against public policy.

What form does a contract take?

In general, contracts may be either (7) ________ or written. Certain

types of contracts, however, in order to be enforceable, must be written and (8) ________. These include contracts involving the sale and

transfer of (9) ________.

How does a contract end?

In case of a (10) ________ of contract, the injured party may go to

court to sue for financial compensation (or (11) ________), or for

rescission, for injunction, or for specific performance if financial

compensation would not compensate for the breach. Specific

(12) ________ of a contract is the right by one contracting party to

have the other contracting party perform the contract according to the precise (13) ________ agreed.

Types of legal contracts

Link the type of contract to its description.

Type		Description
	Consultancy agreement		a	This agreement is used to ensure the repayment of money borrowed, usually in monthly instalments.
	Distribution agreement		b	This agreement is used where one party buys goods from the manufacturer and re-sells them on his own account. He will however be given the right to use the manufacturer's intellectual property rights.
	Franchise agreement		c	This agreement sets out the terms and conditions on which a business supplies goods.
	Loan agreement		d	This agreement is used where one party grants to another the right to run a business in the name of the first party. Examples include Body Shop and McDonalds.
	Manufacturing licence agreement		e	This is the equivalent of a contract of employment for directors.
	Terms and conditions of sale agreement		f	This agreement is used where one party is providing services as an independent advisor to a company.
	Contract of employment		g	This agreement should be used where one party (the licensor) owns intellectual property rights in respect of a product it has developed and wishes to. license the manufacture of the product to a third party.
	Directors' Service agreement		h	This is intended to govern the relationship between a number of shareholders in a company. The agreement works as a second layer of protection preventing the company from being run in a manner other than has been agreed.
	Shareholders' agreement		i	This contract comes into existence as soon as a job offer is accepted whether that offer is oral or in writing.

There are many types of legal contracts which create a legal relationship between individuals and between companies and individuals

Full-time Employment Contract

A contract of employment comes into existence as soon as a job offer is accepted whether that offer is oral or in writing. However, it is easier for both parties if the offer of employment is in writing to prevent disputes at a later date.

Below is an extract from a skeleton contract of employment for a full-time employee. The key word/phrase from each section has been removed. Complete the text using the words/phrases from the box.

1. You have been appointed to the position of administrative assistant.

2. Your _______________________________will be as detailed in the attached Job Description, but this Job Description should not be regarded as exclusive or exhaustive. There will be other occasional duties and requirements associated with your appointment.

3. The _________________________of your continuous service with this company is 1 January 2002.

4. Your specific_________________________________________ are contained in the Employees' Handbook issued by the company, as well as in existing collective agreements negotiated by this company.

5. Confirmation of your appointment will be subject to your satisfactory completion of 3 months'___________________________________________

6. Your____________________________is £ 20, 000 per annum, paid monthly in arrears. Overtime is not payable.

7. Your_____________________________entitlement is 30 days in any calendar year.

8. Your annual__________________________________ is 25 days which cannot be carried over.

9. The minimum period of__________________________________to which you are entitled is 3 months.

10. Your position with regard to________________________________is set out in the explanatory booklet attached.

11. If you have a____________________________________relating to your employment, you should refer to the complaints procedure outlined in the booklet attached.

There are no fixed rules for combining nouns. Here are the options:

Saxon genitive, for example employees' handbook prepositional phrase, for example confirmation of your appointment

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