Using Commercial Contracts E-Book

David Wright

• Herausgeber: John Wiley & Sons
• Kategorie: Wissenschaft und neue Technologien
• Sprache: Englisch

Seitenzahl: 675

Veröffentlichungsjahr: 2016

Beschreibung

Using Commercial Contracts: a practical guide for engineers and project managers examines how the law of contract operates, and the way in which the legal system interprets what a contract actually means. By giving clear, readable and expert advice on key legal issues, this guide provides the manager and engineer with an easily understandable and practical approach to the laws of contract.

Leseprobe

Table of Contents

Cover

Title Page

Copyright

About the Author

Preface

Notes

Foreword

Cases Referred to

Statutes Referred to

Chapter 1: The Law in General

1.1 A little understanding

1.2 Why contract law?

1.3 Commerce and judges

1.4 Dispute resolution

1.5 Where does the law come from?

1.6 Keeping law up to date

1.7 Objectivity and subjectivity

1.8 Is law ‘fair’?

1.9 But there is a further question – does law require

the parties

to be fair?

1.10 The two aspects of commercial contracts

1.11 What does contract law set out to do?

1.12 Transaction versus relationship

Chapter 2: The Start – Using an Agent

2.1 Preliminary

2.2 Almost anyone can be an agent

2.3 Agency is created by consent

2.4 Retrospective agency by ratification

2.5 The undisclosed principal

2.6 The duties of the agent to the principal

2.7 The rights of the agent

2.8 The agent's authority

2.9 The commercial agent

Chapter 3: The Organisation

3.1 The private person

3.2 The sole trader

3.3 The partnership

3.4 The company

3.5 The corporation and other organisations

3.6 Finally

Chapter 4: Making the Contract Part 1 – The Requirements

4.1 Parties with ‘capacity’

4.2 Intention to create legal relations

4.3 Certainty of terms

4.4 Capability of performance

4.5 Legality

4.6 Consideration

Chapter 5: Making the Contract Part 2 – Offer and Acceptance

5.1 Making the deal

5.2 The objective approach

5.3 The stages

5.4 Preliminary discussions

5.5 Invitation to treat

5.6 Offers

5.7 Post-offer situations

5.8 Communication rules

5.9 Some more practical problems

5.10 Contracts outside the offer/acceptance process

Chapter 6: Words in Contracts Part 1 – Words Used Pre-Contract

6.1 The different types of statement

6.2 Misrepresentation

Chapter 7: Words in Contracts Part 2 – Post-Contract

7.1 Introduction

7.2 The rules of contract analysis

7.3 An exercise in precise interpretation

7.4 Some general rules

Chapter 8: The Terms of the Contract

8.1 Express and implied terms

8.2 Implied terms

8.3 Express terms

8.4 Conditions, warranties and innominate terms

Chapter 9: The Basic Framework – Contracts of Sale

9.1 General

9.2 Preliminary points

9.3 The contract of sale and similar transactions

9.4 The sale of goods versus the supply of services

9.5 Sale contracts and contracts for the transfer of ownership of goods

9.6 The sale of goods framework

Chapter 10: Liability Exemption Clauses

10.1 Introduction

10.2 Liability under statute and under the laws of tort

10.3 Liability exemption clauses – general

10.4 The interpretation of exclusion and limitation clauses

10.5 Exemption clauses and liability for breach of contract

10.6 ‘Fundamental breach’

10.7 Exemption clauses and liability in tort, including negligence

10.8 Liability limitation clauses

10.9 Statutory control of liability exemption clauses and the Unfair Contract Terms Act 1977

10.10 Issue 1 – standard terms of business

10.11 Issue 2 – reasonableness criteria

10.12 Issue 3 – practical application

Chapter 11: Factors that May Invalidate a Contract

11.1 General

11.2 Mistake

11.3 Duress

11.4 Undue Influence

Chapter 12: Illegal Contracts

12.1 Public influence

12.2 Changing values

12.3 General

12.4 Contracts that are illegal

12.5 Contracts that are legal but that are carried out in an illegal manner

12.6 Contracts between employer and employee

12.7 Contracts for sole rights, etc

12.8 Contracts between equals

12.9 Footnote: the unauthorised taking of proprietary information

Chapter 13: Privity of Contract

13.1 Introduction to the privity rule

13.2 Exceptions to the rule

13.3 Other solutions

13.4 The Contract (Rights of Third Parties) Act 1999

Chapter 14: Other Relationships

14.1 Bailment

14.2 Security for payment – the mortgage, charge, lien (and the pledge)

14.3 The pledge

14.4 Personal security

14.5 Guarantees and bonds

14.6 The ‘letter of credit’

14.7 Documents of title

14.8 ‘Letters of comfort’ versus parent company guarantee

Chapter 15: Preliminary Agreements and Letters of Intent

15.1 Introduction

15.2 Letters of intent

15.3 Similar situations

15.4 Preliminary agreements

Chapter 16: How the Contract Ends

16.1 Introduction

16.2 Performance and agreement

16.3 Termination clauses

16.4 Discharge by frustration

16.5 Termination following breach

Chapter 17: Remedies for Breach of Contract and Defences to Claims

17.1 Introduction

17.2 The decision to enter a dispute

17.3 Breach in general

17.4 Remedies

17.5 Termination for breach of condition or innominate term, or repudiation

17.6 Rights against the goods or other property

17.7 ‘Retention of title’ and ‘vesting’ clauses

17.8 Liquidated damages and specific charges

17.9 Remedies available through the courts: damages

17.10 Claims by the seller/supplier

17.11 Limits on claims

17.12 Liquidated damages

17.13 Equitable remedies

Index

End User License Agreement

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Guide

Cover

Table of Contents

Preface

Begin Reading

List of Illustrations

Chapter 14: Other Relationships

Figure 14.1 The relationships under a letter of credit

Using Commercial Contracts:

A practical guide for engineers and project managers

David Wright

Consultant and lecturer on commercial contractsVisiting lecturer at Manchester UniversitySometime visiting lecturer and fellow at Cranfield University

This edition first published 2016

© 2016 by John Wiley & Sons Ltd

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British Library Cataloguing-in-Publication Data

A catalogue record for this book is available from the British Library

Library of Congress Cataloging-in-Publication Data

Names: Wright, David, 1939 November 11- author.

Title: Using commercial contracts : a practical guide for engineers and project managers / David Wright.

Description: Chichester, West Sussex, United Kingdom ; Hoboken : John Wiley & Sons, Ltd, 2017. | Includes index.

Identifiers: LCCN 2016003746| ISBN 9781119152507 (pbk.) | ISBN 9781119152545 (epub)

Subjects: LCSH: commercial contracts–England. | commercial contracts–Wales.

Classification: LCC KD1615 .W75 2017 | DDC 343.4207/8624–dc23 LC record available at http://lccn.loc.gov/2016003746

Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books.

Cover image: GettyImages/tmeks

About the Author

David Wright left university with a good law degree. He worked as a commercial lawyer/manager/negotiator in the electrical industry, then, successively in the electronics/avionic and defence industries, on the client side of the offshore-oil industry, and the contracting side of the chemical/process engineering industries. Finally he spent three years at board level, in charge of the contractual and commercial function, in a joint venture process contractor, followed by a period as General Counsel in an electrical/mechanical engineering group of companies.

Since then he has been a lecturer and consultant on contracts and related areas in the electrical/mechanical and process engineering industries. He was a member for over seventeen years of the committees of the Institution of Chemical Engineers which write the Institution's model conditions of contract for the process industry, and supervise the approval, selection and training of arbitrators and adjudicators. He has taught at a number of universities within the UK in law, contract conditions, negotiation and contract/project management, including at Cranfield University, where he held successively a visiting lectureship and visiting fellowship in European Business Law, and at the University of Leeds, Imperial College, and Manchester University, where he has held a visiting lectureship for some twenty years.

He is the author of the Purple Book, the standard Guide to the ICHEME model conditions of contract, A Guide to Consultancy and Law for Project Managers. Finally, he is an experienced arbitrator, mediator and adjudicator in the process industry.

Preface

Many years ago I was in Moscow, carrying out a negotiation in the offices of a state buying organisation. After my negotiation was finished I had to wait for the formal signatures to the document that I had agreed. I passed the time sitting in one of the negotiation rooms. While I was waiting, a Russian buyer, whom I knew, came into the room to discuss a contract with a Japanese salesman. The contract was for the purchase of spare parts for some Japanese equipment installed in a Russian plant. It was written in English, and the discussion was taking place in English. It was the only language the two negotiators had in common. But there was a problem. As soon as the discussion got into detail the negotiators could not understand each other. The Russian buyer had been taught a completely different style of English and vocabulary to the Japanese salesman. This, combined with differences in pronunciation, made it virtually impossible for them to communicate with each other.

I, on the other hand, could understand both of them without any difficulty. Finally I intervened, and spent an interesting and very instructive hour as an interpreter from ‘Russian English’ into ‘Japanese English’ and back again.

The last point that arose during the negotiation was the law that was to govern the contract. The draft that was being discussed was ‘subject to Swiss law’. However, one of the parties, I cannot remember which, objected. As a result it was agreed that the contract should be ‘subject to English law’, which resulted in a few small standard changes to the text.

This is a nice little story. However, it illustrates three points.

The first is the basic problem of the English language. As a general commercial language English is perfect. It is easy to use, because it is a flexible and slow-spoken language. A basic vocabulary and a limited command of grammar will take you a long way in normal commercial discussions. However, people can speak different kinds of English and speak it in different ways, and not understand other kinds.

The second is that in some senses law is not very important. Provided that the contract clearly spells out what the obligations of each of the parties are, and the parties understand what the contract says, then the ‘law of the contract’ may be of only minor importance. Swiss law or English law may make little practical difference to a complex contract once everything else has been agreed. It will usually only be necessary to make minor adjustments to a few clauses to make the change. Of course the ‘law of the contract’ may make a considerable difference if the contract goes badly or a formal dispute arises later on. But the vast majority of negotiated contracts do not result in disputes – even in the civil engineering industry.

The third is that only a little help is necessary to bridge the gap between people who don't understand each other.

This book is the result of years of practice in talking about the law of contract to non-lawyers. It is also the result of what I have learned from others. I have been lucky enough to have worked with some of the best. My tutors at university were A W Brian Simpson and Robert Goff, who tried to get at least some understanding of how law works into my thick head. In the chemical engineering industry I worked for John Brandler, the MD of Petrocarbon Developments Ltd, perhaps the wisest man I have ever known. I owe a debt to Garth Ward and the late Ralph Levene at Cranfield, and to Peter Thompson and Stephen Wearne at Manchester University, and also to all my colleagues on the Institution of Chemical Engineers' committees on dispute resolution and conditions of contract. To these and all the many other people that I have worked with I owe my thanks.

Notes

As you will see, we have tried to explain and illustrate the law by referring to actual cases when it is practicable to do so. When one does this, there is a problem. Many of the basic principles of the law were settled long ago, not in the twenty-first or even in the twentieth century, and there is often a whole series of cases to choose from. We have tried to select cases which give clear examples of the issues, rather than simply selecting the first or the latest.

Women make very good lawyers, and very good negotiators. The author has been skinned alive by women negotiators in what used to be Eastern Europe more often than he cares to admit. However, when writing a book one has to choose a gender. So, with apologies, the text uses ‘it’ to denote legal persons and ‘he’ to denote real persons, except where the real person concerned is a she.

Foreword

This bond doth give thee here no jot of blood;

The words expressly are ‘a pound of flesh’:

Then take thy bond, take thou thy pound of flesh;

Shed thou no blood; nor cut thou less, nor more,

But just a pound of flesh; if thou tak'st more

Or less, than a just pound, be it but so much

As makes it light or heavy in the substance,

Or the division of the twentieth part

Of one poor scruple, nay, if the scale do turn

But in the estimation of a hair,

Thou diest and all thy goods are confiscate.

The Merchant of Venice – Act IV Scene 1 – lines 307–9 and 326–33

Shakespeare knew the world of contracts. As the owner–manager of an important commercial theatre he needed to. So in The Merchant of Venice he puts a commercial dispute on stage. The contract is between a merchant, whose ships have been lost, and a moneylender – the modern equivalent might be a company with a severe liquidity problem and an overdraft. Everyone – judge, claimant and defendant – knew what the contract said, that is until a smarty-pants lawyer stood up and pointed out exactly what those precise words meant. At that point the claimant's case fell apart because it was impossible to perform.

Great theatre – but was the lawyer correct? He, or, as the audience knew, she, was actually making two points. ‘Flesh’ does not mean or include blood, and a pound means precisely a pound.

But was it the claimant's problem if the defendant lost blood as a result of the contract being carried out? Wasn't that actually the defendant's risk? (And Shylock had already said ‘If you prick us do we not bleed?’) Also de minimis non curat lex, the law is not bothered about trifling inaccuracies.

So what was Shakespeare saying?

Perhaps a basic working knowledge of law may be useful. A clever lawyer can run rings round a commercial manager. The lawyer may often get away with it even if the legal arguments are a bit suspect. And, finally, perhaps when it comes to sensitivity to the precise meaning of language, women are usually more skilful than men.

Judge for yourselves.

(And by the way, if anyone doubts this last statement, a sizeable study some years ago by a major UK university found it to be completely correct.)

Cases Referred to

Adams v. Lindsell (1818) 1 B & Ald 681 – Chapter 5

AEG (UK) Ltd v. Logic Resources Ltd [1996] CLC 265 – Chapter 10

Ailsa Craig Fishing Co Ltd v. Malvern Fishing Co Ltd [1983] 1 WLR 964; 1 All ER 101 – Chapter 10

Allcard v. Skinner (1887) 36 Ch D 145 – Chapter 11

Allied Marine Transport Ltd v. Vale do Rio Doce Navegacao SA [1984] 1 WLR 1; [1983] 3 All ER 737 – Chapter 5

Aluminium Industrie Vassen B V v. Romalpa Aluminium Ltd [1976] 1 WLR 676; 2 All ER 552 – Chapter 17

Amalgamated Investments and Property Co Ltd v. Texas Commercial Int. Bank [1982] QB 84 – Chapter 17

Ampurius Nu Homes Holdings Ltd v. Telford Homes (Creekside) Ltd [2013] 4 All ER 377 – Chapter 9

Anderson Ltd v. Daniel [1924] 1 KB 138 – Chapter 12

Andrews Bros (Bournemouth) v. Singer & Co Ltd [1934] 1 KB 17 – Chapter 10

Archbolds (Freighterage) Ltd v. S Spanglett Ltd [1961] 1 QB 374; 2 WLR 170; 1 All ER 417 – Chapter 12

Arcos Ltd v. E A Ronaason & Son [1933] AC 470 – Chapters 8 and 9

Ashington Piggeries v. Christopher Hill Ltd [1972] AC 441; 1 All ER 847 – Chapter 9

Ashmore Benson Pease & Co Ltd v. A V DawsonLtd [1973] 1 WLR 828; 2 All ER 856 – Chapter 12

Associated Japanese Bank (International) Ltd v. Credit du Nord SA [1989] 1 WLR 255; (1988) 3 All ER 902 – Chapters 9 and 11

Atlas Express Ltd v. Kafco (Importers and Distributors) Ltd [1989] 1 QB 833; 3 WLR 389; 1 All ER 64 – Chapter 11

Attwood v. Small (1838) 6 Cl & F 232 – Chapter 6

B & S Contracts and Design Ltd v. Victor Green Publications Ltd (1984) 128 SJ 279 – Chapter 11

Bainbridge v. Firmston (1838) 8 A&E 743 – Chapter 4

Balfour v. Balfour [1919] 2 KB 571 – Chapter 4

Bank of Credit and Commerce International SA . Aboody [1990] 1 QB 923; [1989] 2 WLR 759; [1992] 4 All ER 955 –