András Petz. Contracts and parties

Transcription

1 E-Book Series 1. András Petz Contracts and parties

2 Intro Theory Table of Contents CONTRACTS AND PARTIES 3 Contracts involving property transactions 3 Contracts for sale 3 Sales Contract 3 Supply Contract 3 Escrow Contract 3 Lease Contract 3 Contracts for work and services 3 Works Contracts 4 Contracts for services 4 Agency contracts 4 Employment related documents 4 Employment Contract 4 Collective bargaining agreement 4 Job description 5 Documents related to lending transactions 5 Loan Agreement 5 Credit Agreement 5 Mortgage Contract 5 Security Agreement 5 PARTIES TO CONTRACTS 6 Exercise 1 7 Exercise 2 7 Exercise 3 8 Exercise 4 9 Exercise 5 9 Exercise 6 10 Exercise 7 10 Exercise 8 11 Key to exercise 12 2 The civil law tradition

3 Theory Intro Contracts and Parties Contracts involving property transactions One of the most frequently used contracts is that regulating the transactions involving property, especially real property. Property ownership is crucial for most people. Purchasing real property requires great care for many reasons. First, the number of real properties is finite. While the profits reaped from other properties, such as various goods, products or money result in property increase. On the other hand, since the number of real property is finite, there cannot be real increases. Contracts for sale Contracts for sale regulate the passing of the title of ownership from the seller to the buyer. A contract for sale may be a present sale, under which the goods or products or a real property change hands for the price agreed in the contract, or can be a supply contract, which is a contract for sale under which the products to be sold first have to be produced and then, once available, can be sold. Sales Contract The sales contract describes the conditions of the transfer of title of ownership to a property, real or personal. The transaction can take place in various forms. It can be restricted to the sale of goods and services, which very often are not even regulated in writing. Real property sales contracts are required by the law to be in writing. Supply Contract Supply contract is an agreement for the production of certain goods or products to be sold to by the supplier to the buyer at a future date. It can best be described as a contract of sale combined with the production of the goods or products in question. The supply contact is considered a contract for a future sale. Escrow Contract An escrow contract regulates the payment of funds into escrow with an escrow agent, if escrow is involved in a sale transaction. If a property is encumbered, the buyer can pay the purchase price into escrow, who will hold the funds in escrow, pay off any encumbrances, and apply the funds as instructed by the seller. Lease Contract A lease contract is concluded between the lessor and lessee or, if the property in question is real property, between landlord and tenant. The Landlord gives the property in question to the temporary use of the Tenant, who, in exchange, pays a fee called rent. Contracts for work and services A contract for work regulates the process of performing various types of work. Work can be performed in various legal relationships, including employment contracts, contracts for services, works contracts or even agency contracts. The civil law tradition 3

4 Intro Theory Works Contracts In a works contract, which is also called a contracting agreement, the contractor agrees to build, repair, assemble or create a product required by the client. The main duty of a contractor is to bring about a result, that is to perform works, prepare designs, do research or any other activity which is manifested in a product at the end. Contracts for services Contracts for services regulate the provision of various types of services. Such services can range from representing someone or acting on behalf of another, or providing some work to the other. Agency Contracts An agency contract is made between the principal and the agent. Under an agency contract which the agent agrees to represent the principal in any matters. Representation may include the attorney's activity in a legal proceeding, as well as other matters, such as medical, accounting, commercial and educational matters. The agent s duty is restricted to acting with all the agent s mental and physical abilities directed towards to the interest of the principal. Employment-related documents All employment related contracts regulate various aspects of employment or labour issues. Labour law is a rule-laden field of law, which is controlled by the Labour Code of the relevant jurisdiction, but the relationship between the parties are regulated by further documents. See the most important ones below. Employment Contract The employment contract regulates the relationship between the employer and the employee. Employment is a special type of service performed under circumstances regulated by the law, namely the employment law of the relevant jurisdiction. Employment is generally established by the submission of a job application by an applicant. The employer, or the relevant organizational unit at the employer company, reviews the applications received for a job advertisement and selects the most promising candidates. Collective bargaining agreement A contract concluded between the management of a business association and an organization representing the employees, which is usually a trade union of the workers or a workers' council. The collective bargaining agreement defines the most important conditions of employment, including employees' salary, working hours, payments for any extra work, vacations and various types of benefits. 4 The civil law tradition

5 Theory Intro Job description A document, usually attached to an employment contract which describes the specifications of a job, along with some other important issues. The job description generally includes the job title, duties and responsibilities of the employee, as well as the designation of the person to whom the employee reports. Documents related to lending transactions The provision of a loan requires a precisely documented process, which culminates in making the loan agreement between the creditor and the debtor. However, the complexity of such transactions requires additional documents, creating a secondary obligation aiming at securing the primary one, also referred to as collateral. Loan Agreement Loan contracts regulate lending transactions, whereby the lender lends money to the borrower with the conditions specified in the contract. The loan is definitonally considered a one-time transaction, where the money is usually provided in one lump sum. Howerer, the term "loan" is also used in a broader sense, referring to any contract under which a lender grants a so called loan facility or credit line to the borrower. Credit Agreement The contract between the creditor and the debtor is often called a credit agreement. However, bankers often simply refer to the credit agreement as a loan agreement. There is a difference between the technicalities of the process, but, in practice, they are used interchangeably. A credit line is also referred to as a loan facility agreement. Mortgage Contract A mortgage is an agreement which is used for encumbering the real property as a security for the repayment of a loan. The owner of the property is the mortgagor, who has borrowed a loan from the creditor, typically a bank, referred to as the mortgagee, which is the lender. In order to secure the fulfilment of the payment obligation of the borrower, a mortgage is created on the real property. In case of a payment default, the mortgagee may acquire the title to the property which has been used to secure the loan. Security Agreement A document that grants a secured party a security interest in a specified property that is pledged as collateral. In case of a security agreement, the property in question is usually not real property but some other personal property, usually products or equipment used in commercial transactions. In the event that the borrower defaults, the pledged collateral can be seized and sold. The process is covered by the law of secured transactions. The civil law tradition 5

6 Intro Theory Parties to Contracts This is a short description of the parties to the contracts dealt with in the previous pages. Buyer & seller TENANT & LANDLORD AGENT & Principal EMPLOYER & Employee CREDITOR & Debtor Lender & Borrower Mortgagor & Mortgagee Lessor & Lessee Contractor& Client The buyer acquires title of ownership to a certain property item under a sales contract from the seller, who transfers the title of the same property under a contract of sale. Parties to a real property lease, whereby the tenant has possession of and pays rent for the use of a real propery owned by the landlord. The agent is appointed to act on behalf of the principal as his or her representative. The agent is required to advance the interest of the principal. Employer hires people and pays their wages, thereby providing a living to an employee, who performs the work on a regular basis for a compensation called salary in the form of employment. They are parties to a credit, provided by the creditor to the debtor. The debtor owes a financial obligation to the creditor. They are related through a loan, where the lender lends money to the borrower, and the borrower owes money to the lender. They are parties to a mortgage agreement under which mortgagor has granted right to mortgagee to foreclose the real property if the loan is not repaid. They are connected through a lease, where the lessor lets out property to another in exchange for money, and the lessee uses a property owned by lessor against a fee. They are related to each other through the performance of some works ordered by the client and performed by the contractor. 6 The civil law tradition

7 Terminology Intro EXERCISE I. Choose the most appropriate term 1. The seller and the buyer agree on the details of a sale transaction in a contract. a. selling b. sale c. sales d. sell 2.The principal comissions the agent in the contract. a. agency b. agent c. agent's d. agencies 3. The details of the lease is regulated by the contract. a. tenant b. leasing c. lease d. lessee's 4. Money is lent by the bank under the contract. a. lending b. loaning c. lender d. loan 5. The conditions of a credit line is usually set out by the agreement. a. credit b. crediting c. credits d. creditors' 6. The conditions of employment is regulated by the agreement a. employee's b. employment c. employer's d. employ 7. The client and the contractor regulate their affairs in the agreement. a. contracting b. contracts c. contractors' d. contractings 8. The escrow conditions are laid down by the contract a. escrowment b. escrowing c. escrows d. escrow 9. The company is established by the registration of the of association. a. article b. articles c. arts d. articles' 10. The contracts regulates the foreclosure process in case a loan is not repaid. a. mortgagee b. mortgagor c. mortgages d. mortgage EXERCISE II. Determine which contract the following entities are parties to. Choose only one which fits best. 1. Principal & Agent a. Agency b. Entrustment c. Mandate d. Assignment 2. Seller & Buyer a. Supply b. Deposit c. Sales d. Agency 3. Mortgagor & Mortgagee a. Escrow b. Supply c. Sales d. Mortgage 4. Employer & Employee a. Lease b. Employment c. Collective bargaining d. Agency The civil law tradition 7

8 Intro Terminology 5. Lessor & Lessee a. Tenancy b. Lease c. Rent d. Agency 6. Contractor & Client a. Contracting b. Agency c. Supply d. Work 7. Creditor & Debtor a. Mortgage b. Credit c. Lease d. Assignment 8. Supplier & Buyer a. Sales b. Purchase c. Supply d. Lease 9. Landlord & Tenant a. Lease b. Sales c. Supply d. Agency 10. Borrower & Lender a. Loan b. Agency c. Employment d. Services EXERCISE III. Which are the counterparties of the following parties? Please note that a party may be used in different contexts. 1. Seller a. Buyer b. Vendor c. Client d. Principal 2. Employee a. Customer b. Employer c. Company d. Mortgagor 3. Lender a. Supplier b. Policy holder c. Borrower d. Guarantor 4. Buyer a. Agent b. Contractor c. Seller d. Principal 5. Mortgagor a. Mortgagee b. Escrow agent c. Supplier d. Borrower 6. Debtor a. Agent b. Principal c. Borrower d. Creditor 7. Bidder a. Escrow agent b. Mortgagor c. Tenderer d. Contracting Body 8. Landlord a. Agent b. Mortgagor c. Tenant d. Client 9. Lessor a. Seller b. Lessee c. Landlord d. Supplier 10. Borrower a. Lender b. Mortgagor c. Principal d. Client 8 The civil law tradition

9 Terminology Intro 11. Tenant a. Principal b. Agent c. Lessee d. Landlord 12. Agent a. Seller b. Principal c. Contractor d. Employer 13. Lessee a. Beneficiary b. Tenant c. Lessor d. Purchaser 14. Vendor a. Seller b. Employer c. Agent d. Purchaser 15. Depositor a. Lender b. Depository c. Borrower d. Agent 16. Purchaser a. Employee b. Vendor c. Agent d. Insurer 17.Employer a. Employee b. Vendor c. Creditor d. Agent 18. Supplier a. Seller b. Vendor c. Employee d. Buyer 19. Client a. Buyer b. Contractor c. Agent d. Employer 20. Client a. Buyer b. Contractor c. Agent d. Employer EXERCISE IV. Match the parties according to the contractual relationship between them. If you match them correctly, you will find two parties to the same contract in each line. 1. Property related contracts a. landlord seller b. lessor purchaser c. buyer tenant d. vendor lessee 2. Contract for work a. client principal b. agent service provider c. customer contractor d. employer employee 3. Works Contract a. main contractor tenderer b. client bidder c. tenderee contractor d. contracting entitiy sub-contractor 4. Agreements for banking and insurance a. creditor insured b. lender borrower c. insurance company mortgagor d. mortgagee debtor EXERCISE V. What do the following definitions stand for? 1. A type of contracting agreement to prepare the design for the construction of a building or other structure 2. A contract between organizers of a journey and passengers intending to participate in an organized trip The civil law tradition 9

10 Intro Terminology 3. A contract for the provisions of money by a creditor to the borrower 4. A contract made between the principal and the agent, under which the latter agrees to represent the principal in any proceeding 5. An agreement for the production of certain goods or products to be sold to by the supplier to the buyer at a future date 6. A contract between an employer and an employee that specifies the rights and obligations of each party to the agreement 7. A contract aimed at the performance of research activity following the order and the instruction of the client 8. A contract under a debtor grants a mortgage to the creditor 9. A contract for the construction of a building or any structure 10. A legal document under which the seller's title of ownership to a property item is vested in the buyer _ EXERCISE VI. Is it true that the following contracts are the same? 1. contracting agreement - works contract 2. lease agreement - tenancy agreement 3. agency contract - mandate 4. sales contract - contract for sale 5. loan agreement - lease agreement 6. sales contract - supply agreement 7. sales contract - sale and purchase agreement 8. employment agreement- agency agreement 9. loan facility- credit line 10. escrow contract- deposit agreement EXERCISE VII. Choose the synonym of the following document names 1. Sales contract a. Puchase order b. Contract for sale c. Supply contract d. Contract to sell 2. Agency contract a. Employment contract b. Contract for services c. Loan agreement d. Sales contract 3. Lease agreement a. Escrow contract b. Rental agreement c. Loan agreement d. Mortgage contract 10 The civil law tradition

11 Terminology Intro 5. Works contract a. Employment contract b. Lease agreement c. Contracting agreement d. Labour contract 6. Abstract of Title a. Title page b. Agency contract c. Folio of Title d. Credit agreement 7. Loan facilty agreement a. Lease contract b. Credit line agreement c. Leasing agreement d. Mortgage agreement 8. Contract to sell a. Selling agreement b. Purchase contract c. Supply contract d. Sale and purchase agreement 9. Contract for services a. Sales contract b. Contracting agreement c. Mortgage agreement d. Employment agreement 10. Tenancy agreement a. Employment agreement b. Lease agreement c. Escrow agreement d. Loan agreement EXERCISE VIII. Choose the counterparties of the following party. partyw. You You have have two two choices. choices. 1. Mortgagor a. Mortgagee b. Agent c. Client d. Mortgage holder 2. Client a. Attorney b. Buyer 3. Contractor a. Employer b. Mortgagor c. Attorney d. Client 4. Supplier a. Buyer b. Mortgage holder c. Purchaser d. Insurance company 5. Employer a. Employee b. Creditor c. Contractor d. Landlord 6. Purchaser a. Supplier b. Client c. Vendor d. Tenant 7. Borrower a. Policy holder b. Lender c. Subcontractor d. Creditor 8. Bidder a. Tenderer b. Contracting Authority c. Client d. Insurer 9. Buyer a. Mortgagor b. Creditor c. Supplier d. Seller 10. Insurance company a. Insured b. Contractor c. Policy holder d. Lender The civil law tradition 11

12 Intro Terminology KEY TO EXERCISES EXCERCISE I. 1 c, 2 a,3 c, 4 d, 5 a, 6 b, 7 a, 8 d, 9 b, 10 d EXCERCISE II. 1 a, 2 c, 3 d, 4 b, 5 b, 6 a, 7 b, 8 c, 9 a, 10 a EXCERCISE III. 1 a, 2 b, 3 c, 4 c, 5 a, 6 d, 7 d, 8 c, 9 b, 10 a We hope you have found our e-book useful and managed to acquire some basic information regarding the different contract types and the parties thereto. If you are too busy to attend a classroom trainings and would prefer a more flexible solution, our E-LEARNING COURSE might just be perfect for you. EXCERCISE IV. 1. Property related contracts a. Landlord - tenant b. Lessor lessee c. Buyer seller d. Vendor purchaser 2. Contracts for work a. Client contractor b. Agent principal c. Customer service provider d. Employer employee 3. Works contract a. main-contractor sub-contractor b. client contractor c. tenderee tenderer d. contracting entity bidder 4. Agreement for banking and insurance 1. creditor debtor 2. lender borrower 3. insurance company insured 4. mortgagee mortgagor To help you on your way of becoming an expert of legal terminology, we also have a special offer for you: you can purchase our study book on the Terminology of Civil Law designed to help you during your studies with 20% off if you order it within 7 days from downloading our e-book. Click HERE to place your order now! EXCERCISE V. - Definitions 1 Design contract 2 Travel contract 3 Loan contract 4 Agency contract 5 Supply contract 6 Employment contract 7 Research contract 8 Mortgage contract 9 Construction contract 10 Sales contract EXCERCISE VI. True or false 1 True, 2 True, 3 False, 4 True, 5 False, 6 False, 7 True, 8 False, 9 True, 10 False EXCERCISE VII. Synonyms 1 b, 2 b, 3 b, 4 d, 5 c, 6 c, 7 b, 8 c, 9 b, 10 b EXCERCISE VIII. Counterparties 1 a, c; 2 a, c; 3 a, d; 4 a, c; 5 a, c; 6 a, c; 7 b, d; 8 b, c; 9 c, d; 10 a, c 12 The civil law tradition