Английский язык для юристов. Предпринимательское право - Станислав Коростелев

When there has been no real meeting of the minds because of a mistake, mutual assent was never achieved and the agreement may be rescinded. As in misrepresentation, mistake permits rescission.

Some mutual mistakes are universally accepted as grounds for rescission. Others can give rise to lawsuits but not in all courts or in all jurisdictions. Among them are:

1. Mistakes as to Description. When both parties are mistaken in the identification and description of subject matter, a mutual mistake exists, and rescission will be granted.

2. Mistakes as to Existence. Proof that the subject matter had been destroyed before agreement was made also gives grounds for rescission. The agreement would be voidable if it were proved that just before acceptance the subject matter had been destroyed.

3. Mistakes as to Value. When two parties agree on the value of the subject matter and later find that they were both mistaken, a mutual mistake of opinion, not of fact, has occurred. Mutual mistakes of opinion are not grounds for rescinding a contract.

4. Mistakes Through Failure to Read a Document. Failure to read a document or the negligent reading of a document does not excuse performance on the ground of a mistaken understanding of the document's contents.

5. Mistakes of Law. Misunderstandings of existing laws do not give grounds for rescission; in other words, ignorance of the law is no excuse. Rescission may be allowed, however, when mistakes have related to the law of another jurisdiction.

Duress and undue influence rob a person of the ability to make an independent, well-reasoned decision to enter a contractual relationship freely. Duress may be viewed as an action by one party that forces another party to do what need not otherwise be done. Duress forces a person into a contract through the use of physical, emotional, or economic threats. In contrast, undue influence involves only the use of excessive pressure, and also requires the existence of a confidential relationship. Undue influence should not be confused with persuasion or a subtle form of inducement.

Either violence or the threat of violence against an individual or that person's family, household, or property is physical duress. Emotional duress arises from acts or threats that would create emotional distress in the one on whom they are inflicted.

A threat of a business nature that forces another party without real consent to enter a commercial agreement is called economic duress, or business compulsion. The court will rule the contract voidable on grounds of economic duress if the plaintiff can prove the existence of three elements:

1. The complaining party must first show that the other party was responsible for placing the complainant in a precarious economic situation and that the other party acted wrongfully in doing so.

2. The complainant must also show that there was no alternative other than to submit to the wrongful contractual demands of the party.

3. The innocent party must also show that he or she acted reasonably in entering the contract.

Exercise 1. Comprehension questions:

1. In what cases the wrongful statement is not a fraud?

2. What is the main difference between active fraud and passive fraud?

3. What is fiduciary relationship?

4. What does rescission mean?

5. What are the kinds of mutual mistakes?

6. What is the difference between duress and undue influence?

7. What do duress and undue influence have in common?

8. What does undue influence require?

9. Are persuasion and subtle inducement considered to be undue influence?

Exercise 2. Find in the text English equivalents to the following:

Понуждение; укрывательство; принуждение; фидуциарные отношения; мошенничество; существенный факт; введение в заблуждение; искажение фактов; обоюдное согласие, совпадение намерений сторон; злоупотребление влиянием; недолжное влияние.

Exercise 3. Consult recommended dictionaries and give words or phrases to the following definitions:

Обоюдное согласие сторон; расторжение договора по обоюдному согласию; изменение отдельных пунктов договора; лицо, уполномоченное собственником; предусмотрены любые формы взаимозачетов; вправе изменить размер платы; критерии ничтожности и оспоримости сделок; заинтересованное лицо; отсутствие согласия; нарушение прав и законных интересов; отсутствие вещных прав; неуполномоченное лицо; конклюдентные действия; распространяется на отношения; оспариваемый договор.

Exercise 4. Be ready to talk on one of the following topics:

1. List the elements that must be proved to establish fraud.

2. Identify situations that can give rise to claims of passive fraud.

3. Distinguish between fraud and misrepresentation.

4. Discuss the difference between unilateral and bilateral mistakes.

5. Judge which types of mistakes provide appropriate grounds for getting out of a contract.

6. Differentiate among physical, emotional, and economic duress.

Exercise 5. Make up your own dialog on the case: In Weaver v. American Oil Company, the Indiana Supreme Court held that clauses exculpating an oil company from liability for its negligence and obligating the station operator to indemnify the oil company for damages attributable were unconscionable:

The facts reveal that Weaver had left high school after one and a half years and spent his time, prior to leasing the service station, working at various skilled and unskilled labor oriented jobs. He was not one who should be expected to know the law or understand the meaning of technical terms. The ceremonious activity of signing the lease consisted of nothing more than the agent of American Oil placing the lease in front of Mr. Weaver and saying «sign», which Mr. Weaver did. There is nothing in the record to indicate that Weaver read the lease; that the agent asked Weaver to read it; or that the agent, in any manner, attempted to call Weaver's attention to the «hold harmless» clause in the lease. Each year following, the procedure was the same…The evidence also reveals that the clause was in fine print and contained no title heading which would have identified it as an indemnity clause.

Unit 5

Contractual Capacity

Договорная правоспособность и дееспособность

Способность иметь гражданские права и нести обязанности (гражданская правоспособность) признается в равной мере за всеми гражданами. Правоспособность гражданина возникает в момент рождения и прекращается смертью. Способность гражданина своими действиями приобретать и осуществлять гражданские права, создавать для себя гражданские обязанности и исполнять их, определяется как гражданская дееспособность, которая возникает в полном объеме с наступлением совершеннолетия. Граждане могут совершать любые не противоречащие закону сделки и участвовать в обязательствах (глава 3 ГК РФ). Граждане могут быть ограничены в правоспособности и дееспособности только в случаях и в порядке, установленных законом.

List of key terms and word combinations:

– abandon – отказываться (например, от права притязания)

– affirmance – утверждение, подтверждение

– capacity – правоспособность; дееспособность

– disaffirm – отменять; отказывать в подтверждении

– emancipated – эмансипированный

– majority – совершеннолетие

– minority – несовершеннолетие

– necessaries – необходимые предметы или услуги

– ratification – ратификация; последующее одобрение

– rebuttable presumption – опровержимая презумпция

The law has established a general presumption that anyone entering into a contractual relationship has the legal capacity to do so. This statement means that someone enforcing an agreement does not have to prove that when the contract was entered into the other party had contractual capacity. However, this is a rebuttable presumption; that is, a defending party (a minor, mental incompetent, or intoxicated person) has the right to attack the presumption in order to rescind a contract. Minors are generally excused from contractual liability due to their incapacity; their contracts are voidable.

Under common law, the term minority described persons who had not reached the age of 18 or 21 depending on jurisdiction. Upon reaching that age, a person attained majority.

In some jurisdictions, minors who become emancipated and are no longer under the control of their parents are responsible for their contracts. Emancipated minors include those who are married and those who leave home and give up all rights to parental support. These minors are said to have abandoned the usual protective shield given them.

Minors sometimes lie about their ages when making contracts. Despite the misrepresentation of age, most jurisdictions allow minors to disaffirm or void contracts. Executory contracts, those that have not been fully performed by both parties, may be repudiated by a minor at any time.

Goods and services that are essential to a minor's health and welfare are necessaries. Necessaries include food, clothing, shelter, and medical and dental services. In determining whether goods and services qualify as necessaries, the court inquires into the minor's family status, financial strength, and social standing or station in life. A minor's contract covering only the fair value of necessaries is enforceable against the minor.

An individual may disaffirm an agreement made during minority before or within a reasonable time after reaching adulthood. Failure to disaffirm within a reasonable period of time after reaching adulthood would imply that the contract had been ratified. The method of disaffirmance is fundamentally the same as that of ratification. Disaffirmance may be implied by the acts of the individual after achieving majority, as by a failure to make an installment payment.

Ratification, or affirmance, the willingness to abide by contractual obligations, may be implied by using the item purchased, making an installment payment, paying off the balance of money owed on a previously voidable contract, or continuing to accept goods and services provided under a contract after becoming of full age. Affirmation may also result from the person's oral or written declaration to abide by the contract. These and other acts ratify an existing agreement and elevate it to the status of one that is enforceable against an adult.

Individuals who buy something from a minor have voidable ownership rights because the minor has the right to disaffirm the contract. The law permits a person having voidable ownership rights to transfer valid ownership rights to an innocent third-party purchaser of those goods. Thus, disaffirmance by a minor will not require the innocent purchaser to return the goods (real estate is an exception).

Persons deprived of the mental ability to comprehend and understand contractual obligations have the right to disaffirm their contracts.

A contract made by a person who is mentally infirm or who suffers from mental illness may be valid, if the person's infirmity or illness is not severe enough to rob that person of the ability to understand the nature, purpose, and effect of that contract. Thus, mental retardation or mental illness does not necessarily reduce a person's ability to enter into contracts. The legal question to be answered is whether the mental problem is so serious that the person did not understand the nature of the contract. If that is the case, the mentally infirm or mentally ill person may disaffirm any contract except one for necessaries. The person judged incompetent must return all consideration received, if he or she still has it.

Persons declared to be insane by competent legal authority are denied the right to enter contracts. Any contractual relationship with others results in a void agreement. In most jurisdictions, persons who knowingly take advantage of someone who is declared insane are subject to criminal indictment and prosecution.

Contracts agreed to by persons under the influence of alcohol or drugs may be voidable. Incompetence related to either alcohol or drug use must be of such a degree that a contracting party would have lost the ability to comprehend or to be aware of obligations being accepted under the contract. Disaffirmance in such cases requires the return to the other party of all consideration that had been received. However, such a return may be refused if evidence indicates that one party took advantage of the other's drunken or weakened condition.

Exercise 1. Comprehension questions:

1. When a minor disaffirms a contract what is he entitled to?

2. Give definition of minority and majority.

3. In what cases are the minors liable on their contracts?

4. What privilege do the minors have?

5. Explain what necessaries are.

6. When are the parents liable for contracts executed by minors?

7. When may people ratify contracts made during minority?

8. What rights do people who suffer from mental illnesses have when they make a contract?

Exercise 2. Find in the text English equivalents to the following:

Отказываться; утверждение; правоспособность; дееспособность; отказывать в подтверждении; эмансипировать; ратификация; опровержимая презумпция; последующее одобрение.