Understanding Contracts 1

Read this text about the style of English that lawyers use in contracts. Answer the questions that follow using a full sentence.

The English of contracts • Lawyers use long lists of synonyms in contracts.

Lawyers in most countries use different and more difficult language to draft contracts from the language that they use every day. This is certainly true within the English legal system. However, when you know in what ways the language of contracts is different, you can look at the language very carefully and understand it more easily. Here is a list of what makes the English of contracts different from normal English:

This is because when a lawyer drafts a contract he or she thinks about the fact that a judge will interpret the contract if there is a dispute. In codified legal systems words have a clear definition. However, in the common law system judges have interpreted words in different ways. Lawyers use lists of synonyms to make sure that there is no possibility of misinterpretation. • Lawyers like to use the passive voice. The passive • Lawyers use very long sentences when they draft contracts. A typical sentence in a contract can be 100 words or more. • Often these very long sentences have no is more difficult than the active. • Contracts contain technical words that are part of the language of the law or part of a particular area of business. It is necessary for a lawyer to use these words.

punctuation. This sometimes makes it difficult to understand what the sentences mean. • Sentences in contracts have an unusual structure.

Sometimes legal writing doesn’t use words in the same way as general English. Sometimes verbs, nouns and adjectives are put in a sentence in a different order from normal. • Lawyers often use too many words. A lawyer might All of these things produce a style of writing that is very unusual, even to a native English speaker. The language that lawyers use in contracts is so different from general English that some people say it is not real English at all, but a language only for lawyers, called ‘legalese’. There is a movement in England away from legalese. Lawyers are now encouraged to write in a more modern, understandable style called ‘plain English’. This is good news for international lawyers.

use 20 words to write something that he or she could write with five words. • Contracts contain words that people don’t use any more because they are so old-fashioned. For example, there are English words that you will find in a play like Romeo and Juliet or in a contract, but nowhere else. Contracts also contain very formal words that no one really uses in general English.

a Is the English of contracts easier or more difficult than general English?

Answer: b How long can a typical sentence sometimes be in a contract written in English?

Answer: c Do lawyers use words in the same order as in general English when they draft contracts?

Answer: d Why do lawyers use long lists of synonyms when they draft contracts?

Answer: continued e What is the name that people give to the style of writing that lawyers use?

Answer: f What is the name of the style of writing that modern lawyers are encouraged to use?

Answer:

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What do these words mean?

punctuation — the marks that people use to divide writing into different sections. Examples of punctuation are commas and full stops.

synonym — a word that has the same meaning or almost the same meaning as another word. For example, ‘small’ and ‘little’ are synonyms in English.

sentence structure — the way in which a sentence is organised.

the passive — a sentence that uses the passive is a sentence that has as its subject the person or thing to which an action is done. An example of the passive is ‘the contract was signed by the client’. In the active you would say ‘the client signed the contract’.

word order — the order of something is what comes first, second, third, etc. In different languages the verb, noun and adjective may be in a different order in a sentence.

In the blue box are some examples of words or phrases that lawyers often use in contracts. They are examples of the more difficult words that lawyers use. You will need to understand these words to do Exercise 3. Match the words or phrases with the definitions below.

in the event of (1)territory (5)

terminated (2)entitled to (6)

forthwith (3)compensation (7)

extent (4)manner (8)

Here are three examples of a lawyer’s writing. All three examples are extracts from contracts. A client asks his lawyer what each extract means. Use Exercise 2 to help you to match each piece of writing with the explanation given by the lawyer below. You do not need to understand every single word to do this exercise.

Extracts from contracts a In the event of the death of the Supplier the rights and obligations under this Agreement shall be terminated forthwith.

b In the event that any property of the Contractor is lost or damaged in the course of transportation then the Contractor shall be entitled to compensation from the Company.

c The Company shall allow the Distributor to have full and complete control over the manner and the extent of the exploitation and advertisement of the Product in the Territory.

The lawyer’s explanations ‘If any of your property is lost or damaged on the journey then the company will pay for it.’ (1)

‘You will have complete control of the advertising of the product in the area of the world that we agreed.’ (2)

‘If you die then this contract will end immediately.’ (3)

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What do these words mean?

a supplier — a person or company that provides a particular product or service.

a contractor — a person or company that makes a legal agreement to provide goods or services to another person or company.

a right — a legal entitlement to do or to have something.

a distributor — a person or a company that supplies goods in a particular area, often to shops, on behalf of another person or company.

property — a person’s possessions or general things that they own. Property is different from real property, which means land.

an obligation — a legal duty to do or not to do something.

Lawyers sometimes use expressions that are very formal when they draft contracts. Here is a list of formal expressions that you will often see in contracts. Choose the more modern word or expression from the blue box on the next page to match the following expressions.

a ‘in the near future’ meanssoone ‘until such time as’ meansb ‘at the present time’ meansf ‘on the part of’ meansc ‘in the event of’ meansg ‘due to the fact that’ meansd ‘during such time as’ meansh ‘not less than’ means

The following sentences use the formal expressions in Exercise 1. Below each sentence there is an alternative sentence that contains the same information. Complete the alternative sentences with a more modern word or expression from the blue box in Exercise 1.

a During such as time as this contract is in effect the parties agree to the following terms.Whilethis contract is in effect the parties agree to the following terms.

b In the event of breach the party in breach must provide a remedy within seven days.Ifthere is a breach of contract the party in breach must provide a remedy within seven days.

c This contract will continue until such time as one of the parties terminates it by giving four weeks’ notice in writing.

This contract will continueone of the parties terminates it by giving four weeks’ notice in writing.

d Due to the fact that there was fire at the premises of Forum Marketing Ltd we cannot hold our meeting there next week.

there was a fire at the premises of Forum Marketing Ltd we cannot hold our meeting there next week.

e The meeting cannot take place on Wednesday but it is important that we have it in the near future.

The meeting cannot take place on Wednesday but it is important that we have it.

f We cannot consider employing any more people at the present time, as we do not have enough work for them.

We cannot consider employing any more people, as we do not have enough work for them.

g Due to some very hard work on the part of employees the new business was very profitable in its first year of trading.

Due to some very hard workemployees the new business was very profitable in its first year of trading.

h A party who wishes to terminate this contract must give not less than four weeks’ notice in writing.

A party who wishes to terminate this contract must givefour weeks’ notice in writing.

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What do these words mean?

in effect — in operation or in force. Valid.

to take place — to happen, to occur.

trading — operating as a business.

a remedy — a solution for a breach of contract to make sure that the innocent party does not suffer from the breach.

notice — warning that something is going to happen in the future.

There are two important formal expressions that lawyers often use in contracts. These are:

Notwithstanding means despite or in spite of something. For example, ‘The new law concerning the protection of the environment will come into force next year, notwithstanding a huge amount of opposition to it from industry’.

Inasmuch as means that what you are saying in the rest of your sentence is true only in a limited way or to a certain extent. For example, ‘Caroline is a good lawyer inasmuch as she usually gets a good result in court. However, she is not very good at keeping up to date with important work’.

Use the correct expression, ‘notwithstanding’ or ‘inasmuch as’, in the following sentences.

a Some good has come from my uncle’s deathinasmuch ashe left a lot of money to a children’s charity in his will.

b I agree to sign this contractnotwithstandingthe fact that I have some doubts about your ability to deliver the goods to me on the due date.

c She was employed by one of the top law firms in Londonnotwithstandingher lack of experience.

d The judge in the Court of Appeal held that the court of first instance made a mistakeinasmuch asinadmissible evidence was taken into consideration.

Help desk

What do these words mean?

to come into force — to begin to have legal effect.

lack of experience — only a little experience of something.

opposition to something — strong disagreement to something.

inadmissible evidence — evidence that for some reason cannot be presented in court.

a top law firm — one of the most successful and well-known law firms.

Here are some more formal words that are very common in contracts. They are followed by a preposition. It is a good idea to learn the word together with the preposition. Match the words with the definitions.

Put a word and its preposition from Exercise 4 into these sentences.

a Is the price of the goodsinclusive oftax?

b In this contract we will define you as ‘the Company’ in the defined terms section and that is how you will bereferred toevery time you are mentioned later in the document.

c He worked in an office for many years but now he isengaged inrunning his own business in London.

d You haven’t always worked here. What did you doprior toworking for this law firm?

e This holiday is offered at the price stated in our advertisementsubject toavailability. We have a limited number of places available.

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What do these words mean?

to define — to say exactly what a word means.

running — operating.

defined terms section — the section of a contract where the parties agree exactly what particular words mean when those words appear in the contract.

availability — how many/much of a product that a company has that it can sell.

Here are some words that are very common in contracts. They are all connected with buying and selling goods. Match the words with the definitions.

outlet (1)invoice (4)

retailer (2)manufacture (5)

defective (3)sum (6)

a amount (of money) d a person or company who sells goods to the public b not working properly, faulty e a shop or company through which goods are sold c a list of goods or services that you have received, showing how much you have to pay for them f make or produce goods to sell

Complete these sentences with a word from the list in Exercise 1.

a He is a very successful businessman. He has a chain of more than 20 shops in cities and towns all over the south of England, including a largeoutletin London.

b Have you received ourinvoice? It states that you must pay for the goods within 28 days of delivery.

c We will have to return the computer to you because it isdefective. It looked fine in the box but when we installed it, it wouldn’t work properly.

d Mary is renting a factory unit on an industrial park. She has a new business that involves themanufactureof products for beauty salons.

e £20,000 is a very largesumto invest in a new business. I think you need to get legal advice before you decide to go ahead.

f That supermarket chain is the biggest foodretailerin the United States.

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What do these words mean?

to invest — to put money into a business or put it into a bank account in order to make a profit.

to install — to put a machine in the place that you want to use it and connect it to a power supply so that it is ready to use.

go ahead — continue.

Jumbled words. Look at the definitions below. They are all definitions of formal words. The letters of the words that belong with each definition are mixed up. Put the letters in the correct order to spell the words. The first letter of each word is there for you.

Example: A word meaning to end something, especially something such as a contract. TERMINATE (RATTEINEM)

a A word that has the same meaning as duration. Lawyers use it to talk about the period for which a contract is valid. TTERM(MRET)

b Two words that mean to warn someone that something is about to happen. Often it means to warn someone that a contract is about to end. GGIVE NOTICEN (GVIE NITECO)

c A very formal word meaning the ending of something. EEXPIRATION(EXPRITIONA)

d A noun that means obtaining or getting something. PPROCUREMENT(MENTCUREORP)

e A formal word that means an accumulated total. AAGGREGATE(AGATEREGG)

f A formal word that means to promise to do something. UUNDERTAKE(TAKEUDERN)

g A word that means to suffer something or to place yourself in a bad situation by your own actions with the result that you receive a punishment. IINCUR(CURNI)

Choose the correct word from Exercise 3 to complete these sentences.

a This offer will come to an end at theexpirationof four weeks of the date of this letter. After that date it will not be possible to buy goods at this special price.

b The machinery that you hire under this contract will be available to you for not longer than an of 12 weeks. If you wish to continue to hire the machinery after that you must sign a new agreement with us.

c The seller mustundertaketo insure the goods during transportation before we agree to buy them.

d Julia Davies signed theprocurementcontract, as she was responsible for obtaining office supplies for the government department.

e In writing this letter I formallygive noticethat I will end my employment with this company on 2 May.

f Thetermof this agreement is six months from the date of the parties signing it.

g She will probablyincura fine because she left her car in a no-parking zone.

Here is some important advice about understanding and using certain words that often appear in international contracts. Choose a word from the box below to complete the text.

There are words that some lawyers use that are not part of modern English language. Language specialists describe these words as (a), meaning that they are no longer in common use. These are not technical, (b)words, but words from general English. Some lawyers believe using these archaic words makes a document more serious. The more modern view is that they only make a document look old-fashioned.

The general advice these days from all modern legal writers and law firms is not to use them. Very often you can (c)them without it having any effect on the meaning of the document at all. However, you will see these words in some documents so you need to understand them.

There is a particular category of archaic words that are very common in contracts. These are words starting with ‘here’ or ‘there’, followed by a (d). Examples would be words like ‘herein’ or ‘thereon’.

The ‘here’ words usually mean ‘in this document’ or, in a contract, it could mean ‘in this (e)’.

The ‘there’ words refer to something that the writer (f)before now.

For example:

• ‘The persons (g)named’. This means ‘the people named later in this document’.

• ‘The sum of money borrowed and the interest thereon shall be repaid in full on 5 June’.

The word ‘(h)’ here means ‘on the sum of money borrowed’.

Some lawyers argue that these archaic words are more exact or precise than modern English. Modern language specialists and many leading law firms say that this is not true and for this reason archaic words are falling out of use in the UK.

Look at the definitions of the archaic terms below. Complete the sentences that follow with one of the archaic terms from the list. You will need to use each word only once.

• Hereby — by means of this document/with these words/with this action.

‘I hereby accept your offer.’

‘The price named herein is final and non-negotiable.’

• Hereinafter — starting from this time/later in this document.

‘ATL Electrics plc, hereinafter known as “the Company”.’

• Heretofore — earlier in this document/previously/before the time of writing.

‘The property heretofore known as Downing House is renamed Appleby House.’

• Hereunder — in a later part of this document/under the terms of this agreement.

‘The terms and conditions are listed hereunder.’

a Royal Airlines Limited,hereinafterreferred to as ‘RAL’. (later in this document)

b The Author guarantees to the Publisher that the Work isheretoforeunpublished by any other company or individual. (previously)

c In consideration of the sum of £10,000, receipt of which the Sellerherebyacknowledges. (by means of this document)

d Any products referred tohereinremain the property of the Supplier until the Customer pays for them in full. (in this document)

e In case of dispute between the parties, any arbitration conductedhereunderwill be conducted by Arbitrators Direct of London. (under the terms of this contract)

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What do these words mean?

in common use — something that people use often.

to fall out of use — if something falls out of use it means that people don’t use it any more.

to delete something — to remove something from a piece of writing.

to acknowledge receipt — to confirm that you have received something.

a category — a group of things that are of the same kind.

in full — completely.

arbitration — the process of a third party settling an argument or a legal problem without the matter going to court.

a leading law firm — one of the most important law firms.

non-negotiable — can’t be changed, fixed.

conducted — done, carried out.

Look at the definitions of some more archaic terms below. Complete the sentences that follow with one of the archaic terms from the list. You will need to use each word only once.

• Thereby — as a result of this or that action.

‘Your client signed the contract and thereby entered into a binding agreement.’

• Therein — in or into a particular place or thing/in that/in there.

‘The rented property and the furniture contained therein.’

• Thereon — on it/on there/on what I have just mentioned.

‘The amount borrowed and the interest due thereon must be repaid by 10 March 20XX.’

• Thereinafter — later in that place or thing/later in what I have just mentioned.

‘We were defined in that contract as the Company and we were known as the Company thereinafter.’

• Thereto — to it, to the thing that I have just mentioned.

‘At the meeting we will discuss Mrs Jones’s will and all matters related thereto.’

a He sold the company andtherebybecame a millionaire. (as a result of that action)

b I enclose a copy of the contract. Please return it to me together with any amendmentsthereto. (to the contract I have just mentioned)

c The owner of the land and any person who wishes to claim an interestthereinshould contact this firm of solicitors as soon as possible. (in the land that I have just mentioned)

d The defamatory story in the newspaper refers to my client in the first paragraph and refers to her another four times in total. (later in the thing that I have just mentioned)

e The Buyer agrees to insure the painting and to pay any import tax duethereonupon delivery to the UK. (on that particular thing)

There are certain archaic words that lawyers use in contracts to mean ‘mentioned in an earlier part of this document’. These words are:

Look at this typical example. The relevant parts of the sentences are highlighted.

‘The contract between the claimant and the defendant was signed in August. Said contract was for the supply of goods.’

In this example the word ‘said’ is used to mean ‘the contract that I have already mentioned’. The lawyer could have used the other words in the list to do the same. Alternatively, he or she could have just said ‘It’ or ‘The contract’:

‘The contract between the claimant and the defendant was signed in August. It was for the supply of goods.’

continued When you see one of these archaic words in a contract you must look back in the document to find the noun that it refers to. Sometimes you are lucky and the noun that is being described is near the archaic word, as in our example. However, sometimes the noun and the archaic word are far apart and that makes things more difficult.

Look at the following examples. They are all from the terms and conditions of sale of a contract. In each example you will see one of the archaic words from the previous page. In each example undertine the word or words that the archaic word refers to.

a Payment must be made upon delivery of the goods. The exception is where payment by invoice has been agreed. In the event of payment by invoice payment must be made within 30 days of receipt of the same.

b Where a specific delivery date has been agreed and aforesaid cannot be met the Buyer will have the option to receive a full refund.

c The goods shall be inspected by the Buyer upon delivery. All goods come with a delivery note. In the event that goods cannot be examined by the Buyer the aforementioned document shall be marked ‘not examined’.

d Any defective goods must be returned to the Supplier. Said goods must be correctly packaged.

Help desk

What do these words mean?

comments — things that are written or said about someone or something.

meet (met) an obligation — to fulfil an obligation. To do what you promised to do.

exception — something that is not included in a general rule.

refund — the money that you get back from a shop or a supplier when you return goods.

packaged — put into the correct box, bag or container for transporting or selling.

option — a choice.

Look at the words and phrases in the blue box. They are all connected with a specific type of contract. Use the correct word or phrase to complete each definition on the next page.

aPremisesare the buildings that a business uses.

bCopyrightis the legal right for someone such as a writer or a singer to publish his or her own work and to be sure that no one can copy or exploit it without permission.

cImport dutyis a type of tax that you have to pay when you bring certain goods into a country.

dCarriageis moving goods from one place to another.

eStaffare all of the people who work for a particular business or organisation.

f Atrademarkis a symbol such as a word or a picture that a company puts onto its products to distinguish it from the products of its competitors.

g Apatentis an official document. The document protects a new invention, such as a new medicine or a new machine from being copied or exploited.

hIn transitmeans in the process of being transported from one place to another.

i Ahireris a person or organisation that pays money to someone to use something for a certain period of time.

j Aninventionis something new that someone has made or designed for the first time.

kOn boardmeans placed on a plane, ship, lorry or a train.

l Anowneris a person or organisation that has the legal right to possess something. It belongs to them.

Each of the words and phrases in Exercise 1 are connected with a specific type of contract. Sort the words into the correct type of contract under the headings below.

A contract for the hire of a hotel for a company’s conference A contract for the transport of goods by ship A contract concerning a company’s intellectual property rights

Put the correct word or phrase from the contract for the hire of a hotel for a company’s conference into the following sentences.

a Theownerof the hotel bought it last year from a large hotel chain.

b Thehirerof the hotel conference room wants to book the room for three days in June.

c The hotelpremisesare very big. In fact, it is probably the biggest hotel in the city.

d There are over 200staffworking in the hotel.

Put the correct word or phrase from the contract for the transport of goods by ship into the following sentences.

a The goods were puton boardthe ship in Liverpool and the buyer will unload them in Sydney.

b The cost ofcarriageis £600.

c The buyer agrees to pay anyimport dutythat the customs authorities demand when the goods arrive in Australia.

d The goods arein transit. They are on a ship somewhere between England and Australia.

Put the correct word or phrase from the contract concerning a company’s intellectual property rights into the following sentences.

a The computer was a newinventionin the twentieth century.

b The publishing company and not the author hascopyrightin the book.

c If you invent something new it is important to register apatent. You will get a document that protects your right to produce and sell your invention.

d Thetrademarkof the Victoria Bennett Jeans Company is the letters VB with a gold circle around them.

Help desk

What do these words mean?

a conference — a large meeting where people discuss important matters, especially business matters.

customs authorities — a government department that collects tax on goods that people bring into the country.

a hotel chain — a group of hotels that all have the same owner.

an author — a person who writes books.

intellectual property rights — a person’s rights in something that they have invented or created. No one else has the right to make, sell, copy or exploit the invention or creation without permission.

to book something — to say that you want to reserve something to use in the future such as a car or a hotel room.

Here are some questions about the words in the key vocabulary. Match the questions with the answers provided.

Here is a list of different sections that you will find in the first half of a commercial contract. Match each section of the contract with the correct extract below.

defined terms • the recitals a ‘Goods’ means any goods or services that are ordered from ABC Printing Ltd and includes any materials incorporated in them.

This is from.

b This Agreement is made on this fifth day of March 20XX between ALT ELECTRICS Ltd and PARSONS MANUFACTURING Ltd This is fromthe parties.

c The Work will be carried out on 5 May 20XX at the Buyer’s address.

This is from.

d (1) The Buyer owns a shop.

(2) The Supplier is an experienced electrician. (3) The Buyer’s shop is in need of electrical modernisation and repair. (4) The Supplier will carry out the electrical modernisation and repair to the shop upon the conditions set out in this agreement.

This is from.

e In consideration of the sum of £5000 the Supplier agrees to carry out the Work listed in Schedule A of this Agreement according to current UK standards as specified by the relevant legislation.

This is from.

Help desk

What do these words mean?

incorporated in — included in.

relevant legislation — the part of the general law of a country that the parties to a contract must obey in a particular situation.

to carry something out — to do something.

set out — written or stated.

Put a word from the text about the structure of a contract in Exercise 1 into these sentences.

a The people or companies who are entering into an agreement are called thepartiesto the agreement.

b Lawyers rarely have to draft a contract fromscratchas they usually have a precedent that they can use as a template.

c The section of a contract that gives the background to the contract and the reasons why the parties are entering into the agreement is called therecitals.

d Most law firms have a collection of precedents that they refer to as a precedentbankor a precedent library.

e The section of the contract that deals withdeliveryof goods or services usually states exactly when the key obligations will be carried out.

Read the following pairs of sentences. For each pair of sentences there are two possibilities, A or B. Decide which sentence uses the correct preposition. Write your answers in the box below. There is an example at the beginning (*).

Example (*) (A) The Company shall not be responsible for any of the Agent’s costs and expenses.

(B) The Company shall not be responsible to any of the Agent’s costs and expenses.

1 (A) All prices stated in the Agreement are inclusive of tax.

(B) All prices stated in the Agreement are inclusive with tax.

2 (A) The Company is engaged at the business of manufacturing electrical goods.

(B) The Company is engaged in the business of manufacturing electrical goods.

3 (A) The Buyer agrees to pay interest of any outstanding payment.

(B) The Buyer agrees to pay interest on any outstanding payment.

4 (A) The Company will pay the Employee’s expenses subject to the Employee providing valid receipts.

(B) The Company will pay the Employee’s expenses subject on the Employee providing valid receipts.

5 (A) JHS Manufacturing, hereinafter referred to as ‘the Company’.

(B) JHS Manufacturing, hereinafter referred in as ‘the Company’.

(*) A (1) (2) (3) (4) (5)

Look at this list of words. They are all nouns. Put the correct word into the following sentences. Write your answers in the boxes numbered 1-10 below. There is an example at the beginning (*).

Example (*) A person or company that supplies goods in a particular geographical area is often referred to in a contract as a (*). 1 A (1)is an existing contract that a lawyer can use as a model when drawing up a new contract.

2 Many written contracts refer to a (2)for a breach. This is a solution that the party in breach can offer to the injured party to compensate him or her for the effect of the breach.

3 An (3)is an itemised bill. Many contracts state what the penalty will be if it is not paid on time.

4 The (4)section of a contract provides the background to the contract. It states why the parties are entering into the agreement.

5 A contract will often use the formal word (5)to describe commercial land and buildings.

6 Contracts that deal with the export or import of goods usually have a clause that states which party will be liable for any import (6)when the goods arrive in a foreign country.

7 In contracts where creative work such as artwork or writing is sold, it is important to state which of the parties owns (7)in the work.

8 A place that sells goods to the public is often referred to in a contract as a retail (8).

9 The (9)of a period of time is a very formal way of saying the end of that period of time.

10 The duration of a contract is usually referred to as the (10)of the contract.

(*) AA (1) (2) (3) (4) (5)

(6) (7) (8) (9) (10)

Read the text below. It is from a contract. Some of the words in the text are underlined. The meanings of these words appear in the list below, but they are not in the same order. Match the underlined words in the text with the correct meanings by writing the letters (A, B, C, etc.) in the box below. There is an example at the beginning (*).