Pair work

Ex. 9. Read through the text quickly and decide whether these statements are true or false.

1. A third-party beneficiary contract is one which intends for someone who is not a party to that contract to benefit from the contract.

2. The term privity of contract refers to the relationship which exists between the immediate parties to a contract.

3. The transfer of rights under a contract is known as delegation.

4. Novation is the renewal of a contract by the contracting parties.

Generally, a contract operates to confer rights and impose duties only on the parties to the contract and no other parties. The principle that follows from this is that third parties have no rights and, as such, cannot enforce contractual provisions. This contractual relationship is summed up in the term privity of contract. However, in many jurisdictions, there are two exceptions to this general rule: the first is when the original contract provides for rights to be conferred on a third party, and the second is when contractual rights and duties are transferred to a third party at a later date.

When speaking of this first type of situation, lawyers generally refer to third-party beneficiary contracts. The most common form of this type of contract is where party A enters into a valid contract with party B which stipulates that party B shall render performance for the benefit of party C, i.e. the third-party beneficiary. No problems arise if party B performs. But what happens when party B fails to perform? Have rights been vested in party C such that C can enforce the contract, or must party A do so? In many jurisdictions, this problem is addressed through a determination of whether the contract expresses an intent to create a legally enforceable right in the third party. However, must the intent be from both parties to the agreement (A and B) or just the recipient of the promise to be enforced, i.e. the promise (A) as opposed to the promisor (B)? The courts usually look to the intent of the promise and ask the question: According to the contract, who was to receive the benefit of the promise, the promise or a third party directly?

In deciding the promisee’s intent, the courts look at the following factors: (1) is the third party identified in the contract?; (2) is performance to be made directly to the third party?; (3) does the third party have any rights (specific or general) under the contract?; and (4) is there any relationship between the promise and the third party such that it could be inferred that the promise wished to enter into a contract for the benefit of the third party? Of course, the greater the number of times the court answers “yes” to the above questions, the more likely it is that the court will rule that the third party is an intended beneficiary, and thus entitled to enforce the contract, as opposed to an incidental beneficiary.

In the second case mentioned above, rights and duties are transferred after the original contract has been signed. If in the original contract the transferring party (A) is owed a right by the non-transferring party (B), then A is known as the obligee and B is the obligor. However, if in the original contract A owes B a duty, then A is known as the obligor and B the obligee. When it is not specified whether rights or duties are being transferred, the term assignor can be used for A, who attempts to transfer his rights and/or duties under the contract to a third party (C, the assignee). If a right is being transferred, C becomes the obligee in place of A. (Although this does necessarily release A from any obligations to B under the original contract.) If a duty is being transferred, A is known as the delegator, while C is referred to as the delegate (US: delegatee). The term assignment of contract can mean several different things. This term is ambiguous, as it does not indicate whether there is both an assignment of rights and a delegation of duties. In everyday usage, it generally means that both are applicable. However, in the interests of precision, the term “to assign” should really be reserved specifically for the transfer of rights, and the term “to delegate” should be used in connection with the transfer of duties (and therefore with performance). This distinction is crucial because, while an obligee can rid himself of a right merely by making an effective assignment, an obligor cannot rid himself of a duty by the same means. Generally, in order for the obligor to discharge his duties under the contract through assignment, the oblige must first release him from his obligations under the contract. When this takes place, there is a novation of the original contract, in which the obligor’s position is taken on by a new party.

The right to assign is generally governed by an assignment clause in the contract, the enforceability of which depends on many factors, including the particular wording of the clause, the nature of the obligations to be performed and the nature of the contract.

Ex. 10. Look through the text again and complete these verb-noun collocations. Then express the meaning of each phrase in your own words.

1. confer r______ (paragraph 1)

2. impose d______ (paragraph 1)

3. enforce с______ p______ (paragraph 1)

4. render p______ (paragraph 2)

5. delegate d______ (paragraph 4)

6. assign r______ (paragraph 4)

Ex. 11. Paragraphs 1 and 3 of the above text refer to third-party rights.

In the context of third-party beneficiary contracts, the time when the third party's rights actually arise differs between jurisdictions. Some jurisdictions find that the third-party rights take effect immediately at the time the contract is made, while others find that these rights do riot arise until the third party acquires knowledge of the rights and agrees to accept the benefits. Finally, some jurisdictions find that the third-party beneficiary must change his position in reliance upon the contract in order for his rights to arise. This means that in some jurisdictions the third-party beneficiary must take some type of action which he would not necessarily have taken or refrain from taking some type of action which he would not necessarily have refrained from taking, unless he thought he was to receive some benefit under the contract.

How is this question handled in your jurisdiction? Choose the sentence below that applies to your jurisdiction and discuss with a partner. If you are uncertain of the law in your jurisdiction, discuss what you think the law should be and support your position.

1. Third-party rights arise immediately at the time the contract is made.

2. Third-party rights do not arise until the third party acquires knowledge of the rights and agrees to accept the benefits.

3. Third-party rights do not arise until the third-party beneficiary has changed his position in reliance upon the contract.

4. Third-party rights as described above are not recognised.

Ex. 12. Form pairs of nouns in italics ending with -or and -ее following the pattern of promisor/promisee using these verbs. Then match some of the noun pairs with their definitions. Find other pairs in the text above3 and add them to your list. Think of some other pairs and their definitions.

franchise, mortgage, consign, lease, transfer

1. Someone (usually the owner) who gives a lease (right to possession) in return for a consideration / someone to whom a lease is granted and who uses the property.

2. Someone who conveys title to property or property to another/ someone to whom title to property or property is conveyed.

3. Someone who borrows money and pledges real property as security for the loan / someone who lends money and receives real property as security for a loan.

4. Someone who sends goods to another in a contract of sale/someone who receives goods.

5. Someone who owns the rights or licence of a business who grants the licence or permission to another / someone granted the rights or licence of a business.

Ex. 13. Translate the following dialogue into English.

А.: –Какие пункты контракта вызывают больше всего споров на переговорах перед его заключением, и с чем это связано?

В.: –О, это довольно сложный вопрос. Начнем с цены, Если прейскурантная цена разумная, и если базисные условия не вызывают разногласий, цену удается согласовать сравнительно легко, Однако, если нужно согласовывать и базисные условия, и стороны настаивают на своем, на это может уйти много времени. Или же, если в экономике стран договаривающихся сторон имеются колебания (неустойчивость в отношении стоимости сырья, рабочей силы и т.д.), тогда стороны могут согласиться на скользящие цены, хотя это и не является нашей обычной практикой.

А.: –И часто приходится указывать в контракте скользящие цены?

В.: –Я уже сказал, это зависит от состояния экономики. Далее, если конъюнктура рынка резко меняется, особенно если предложение начинает превышать спрос, как, например, в отношении нефти и нефтепродуктов, то вопрос цены обсуждается дольше, чем обычно.

А.: –И чем это кончается?

В.: –Приходится снижать прейскурантную цену до уровня мировых цен.

А.: –Это значит получить меньше валюты, чем предусмотрено планом со всеми вытекающими отсюда последствиями (with all that this implies), не так ли?

В.: –Да, конечно. А возьмите, к примеру, вопрос скидки с цены. Иногда мы вынуждены, к сожалению, предоставлять большие скидки, чтобы не потерять рынок.

А.: –Да, вы правы. Я согласен, что необходимо учитывать состояние рынка.

В.: –Теперь возьмем условия платежа. В современных контрактах предусматривается такая их комбинация иногда, что сразу трудно разобраться.

А.: –А это чем объясняется?

В.: –Все тем же. Продавец хочет сразу же иметь наличные деньги за свой товар, а покупатель заинтересован в получении кредита, чтобы иметь возможность платить за товар только после его получения. И это вызывает горячие дебаты.

А.: –Мне кажется, согласование других статей контракта, таких, как «Упаковка, маркировка и отгрузка», не ведет к продолжительной дискуссии.

В.: –По сравнению с другими статьями контракта безусловно это так, хотя не всегда.

А.: –А как насчет таких статей, как «Гарантия» и «Санкции»?

В.: –Что касается «Гарантии» часто долго согласовывают ее срок, так как в разных странах разный подход к этой проблеме. Более того, это связано с организацией послепродажного обслуживания и некоторыми другими вопросами.

А.: –Ну уж «Форс-мажор» и «Арбитраж» не могут вызывать долгих споров, не так ли?

В.: –Я бы так не сказал. Например, некоторые фирмы настаивают, чтобы государственные санкции были обязательно включены в обстоятельства непреодолимой силы, а мы, само собой разумеется, против этого. А что касается «Арбитража», некоторые фирмы, особенно те, которые раньше с нами не торговали, предпочитают разрешать споры и рекламации в Стокгольме в соответствии со шведским гражданским и коммерческим правом или с правом другой страны.

А.: –И как мы к этому относимся?

В.: –Сначала пытаемся доказать, что наш Арбитражный суд урегулирует претензии и разногласия надлежащим образом, даем списки стран, которые пользовались их услугами, а если это не помогает, у нас нет другого выхода, как согласиться с этим.

А.: –Понятно.

В.: –А еще хочу добавить, что, если фирма оспаривает каждый пункт и по мелочам, не имеющим большого значения, значит, она не заинтересована в развитии с нами торговых или других экономических отношений. Это тоже надо иметь в виду и не попадаться на удочку (not to get hooked).

А.: –Благодарю за всю эту информацию. Она весьма интересна.

В.: –Пожалуйста. Всегда рад беседе с вами.