1 The Injured Party Has the Right of Rescission

If one party breaches the contract by failure to perform, the other party may usually consider any obligation as discharged.

This remedy is the right of rescission. Each party returns any consideration received and gives credit for what cannot be returned. The entire contract must be rescind, not just a part of it. It may be done by voluntary agreement of the parties, or it may be done by court order at the request of the injured party. Neither party gets damages.

2 The Injured Party May Have the Right of Cancellation

Cancellation is a variation of rescission. It exists only for breach of contract for the sales of goods. The injured party — either buyer or seller — may cancel the contract and return consideration received.

When a breach of contract occurs, the injured party is entitled to be in the same position he or she would have been in if the contract had been performed. The parties frequently negotiate a settlement directly or with the help of their lawyers. If they do not reach a settlement, the injured party may sue to recover damages — money awarded by the court for loss or injury caused by incomplete performance or failure to perform.

However, the victim of the breach of contract is required to mitigate damages. This means that damages must be reduced by any means reasonable under the circumstances. For a victimized buyer it might require buying substitute goods elsewhere possible or getting someone else to perform the service. For an employee unfairly discharged, it could require promptly seeking and accepting similar employment elsewhere.

3 The Injured Party May Compel Specific Performance or Get an Injunction

Sometimes money damages are not an adequate remedy for breach of contract. Therefore a court may give the injured party a form of special relief termed specific performance. Specific performance is the actual completion of the agreement as promised. The court simply orders the defaulting party to perform as agreed.

Generally, money damages suffice as a remedy for breach of contract in cases involving the sale of personal property. The victim may use the money to buy similar property from someone else. If the property is unique, however, so that it cannot be obtained elsewhere, specific performance may be awarded. An example would be a rare work of art. This remedy is also generally available when the contract is for the sale of real property because every parcel of land is unique.

In some cases, when money damages or specific performance would not be appropriate, the court may order rescission or grant an injunction to prohibit specified acts.

Vocabulary

recovery of damages возмещение ущерба/ убытков

remedy средство судебной защиты

rescission [ri’si3n] аннулирование, ликвидация, отмена

to rescind [ri’sind] аннулировать, расторгать, отменять (договор)

cancellation аннулирование, отмена (при покупке товаров)

to mitigate уменьшать возмещение убытков

specific performance исполнение договора в натуре

injunction судебный запрет

waiver отказ от права, требования

judgment-proof не подчиняющийся судебному постановлению

Text 3 How Damages Are Measured

In awarding damages for breach of contract, the court tries to place the injured party in approximately the position that party would have been in, had the breach not occurred. The amount awarded as compensatory damages is usually determined by the extent of the injury. One party is not permitted to increase the damages by continuing to perform the contract after notice of the other’s breach or intention to cancel. The injured party is also required to mitigate damages if reasonably possible. Failure to perform a duty under a contract is a legal wrong. Therefore courts will award nominal damages — token amount awarded when rights have been violated, but there is no actual injury. This could happen when, after a breach, the plaintiff finds a satisfactory product at lower price. Nominal damages are granted in recognition of the rights that have been violated.

At the time of entering into a contract, the parties may agree upon an amount of money that, in case of default, is to be paid by the person who breaches. This sum is known as liquidated damages. This arrangement is common when actual damages would be difficult to prove. It is enforceable if the amount is reasonable. If damages are not reasonable, the court will not enforce the agreement but will award reasonable damages if proved.

Under certain circumstances, such as when a tort is involved in a breach of contract, the court will award exemplary or punitive damages. Such damages are awarded in addition to the actual damages. The purpose of exemplary or punitive damages is to punish and to make an example of the defendant. This could happen, for example, when a defendant seller defrauds a plaintiff buyer.

Vocabulary

arrangement соглашение

compensatory damages компенсаторные, реальные, фактические убытки

nominal damages номинально-символические убытки

token amount символическая сумма

liquidated damages заранее оцененные убытки

punitive damages [‘pju:nitiv] 1) штрафные убытки;

2) денежное возмещение в виде наказания ответчика для примера

to enforce a contract осуществлять, приводить в исполнение контракт

Translate into Russian:

Reviewing Important Points

1 As a general rule, one who is not a party to a contract has no rights or duties under the contract. However, a third party beneficiary may enforce a contract made for such party’s benefit. An assignee may also acquire rights or assume duties under another party’s contract.

2 In case of a breach of contract, the injured party has various remedies. An injured party may: a) rescind or cancel the contract, b) recover the amount of loss through damages, and c) in certain cases, require specific performance.

3 After default, the injured party usually may recover the amount already spent in carrying out the obligations incurred as part of the contract. But the injured party should not increase the damages. Instead, the damages should be mitigated — that is, reduced if reasonably possible.

4 Generally a party to a contract has the option of breaching it. The courts will not punish such action by awarding punitive or exemplary damages unless a tort is involved. Rather, the court will award compensatory damages. Sometimes the court will award either liquidated or nominal damages.

5 When the legal remedy of damages is not adequate, the court may grant the equitable remedy of specific performance, or it may prohibit specified acts.

6 At the time of entering into a contract, the parties may agree to pay a specified, reasonable amount of damages if actual damages would be difficult to prove in case of default. Such damages are known as liquidated damages. The amount must not be so excessive that it would constitute a penalty.

LESSON 10 TYPES OF SALE

Text 1 A Sale

A sale is a contract in which ownership of (also known as title to) goods transfers immediately from the seller to the buyer for a price. Goods are tangible, movable, personal property, such as a jet pane, clothing, growing crops, or the unborn young of animals. By definition goods do not include the following:

1 money (except rare currency or rare coins);

2 intangible property (such as rights under a contract, which are transferred by assignment rather than by sale);

3 patents and copyrights;

4 real estate (although the transfer of title to real property is commonly called a sale, it is technically a conveyance).

A contract to sell is a contract in which ownership of goods is to transfer in a sale in the future. In both types of transactions, the seller is known as the vendor. The buyer is known as the vendee (also called the purchaser). The transaction involving a vendor and a vendee is called a “sale” by the seller and is called a “purchase” by a buyer. A sales contract may be made in any manner sufficient to show agreement, and the contract suffices if the parties by their actions recognize the existence of a contract.

The price for the goods may take the form of money, services, or other goods. However, when the parties to a sale exchange only goods for goods, without involving money or services, the sale is known as a barter.

Payment occurs when the buyer delivers the agreed price and the seller accepts. Receipt of goods means that the buyer takes physical possession or control of them. Receipt usually involves actual delivery. However, delivery may be constructive, as when one gets the keys to a car or receives a warehouse receipt for stored goods.

Acceptance of goods means that the buyer has agreed, by words or conduct, that the goods received are satisfactory. Acceptance is shown when the goods are used, resold, or otherwise treated as if they were owned by the buyer. Acceptance may also be indicated when a buyer fails to reject the goods within a reasonable time, if the buyer has had adequate opportunity to inspect them.

The price for goods is usually fixed in the contract. However, the parties may indicate that the price is to be set in a certain way at a later date. This method is especially used in long-term contracts when considerable instability of prices is expected. Ordinarily, when nothing is said about the price, a contract results if all other essentials are present, and provided the parties do not express a contrary intent. In such a case, the buyer is required to pay the price that is reasonable at the time of delivery.

In many situations, the contract is primarily for personal services. Such contracts are not sales because any goods supplied are merely incidental.

A merchant is a seller who deals regularly in a particular kind of goods or otherwise claims to have special knowledge or skill in a certain type of sales transaction. A casual seller is one who sells only occasionally and does not meet the definition of merchant. For example, you would be a casual seller if you sold your private automobile. A used-car dealer selling the same car would be a merchant.

Vocabulary

intangible property нематериальное имущество, «неосязаемое» имущество, имущество в правах

movable property движимое имущество

real estate недвижимое имущество, недвижимость

conveyance передача правового титула

acceptance of goods приемлемость товара для покупателя

to deal торговать

warehouse receipt квитанция на товар, принятый на хранение

vendor продавец

vendee покупатель

merchant 1) коммерсант 2) оптовик

casual seller случайный продавец

constructive юридически подразумеваемый

incidental побочный, случайный

Text 2 Must Delivery and Payment Be Made Simultaneously?

In the basic sales transaction, payment, delivery (transfer of possession), and transfer of title take place simultaneously at the seller’s place of business. Even if payment and delivery, or both, take place later, title still passes when the buyer selects and agrees to buy the goods in the seller’s store. Thus, unless it is otherwise agreed or is the custom of the trade, the seller may retain the goods until the buyer makes payment in full. Similarly, the buyer may refuse to pay the price until the seller delivers all the goods. The buyer is entitled to a receipt when payment is made.

A bill of sale is a receipt that serves as written evidence of the transfer of ownership of (title to) goods. Neither a bill of sale nor a sales contract need identify the parties or explain the terms of the transaction. If a bill of sale is signed by the seller, buyer, or both, it can satisfy the requirements of the Statute of Frauds for a signed writing.

When goods are lost, stolen, or destroyed, as in fire, the document can be used to help prove value for insurance purposes. If the owner borrows money and uses the goods as security, the bill of sale ensures the creditor that the debtor owns the goods pledged.

Most sellers may extend credit to qualified buyers. Retailers may sell to customers who use credit cards or bank accounts, or who pay by installments.

Vocabulary

delivery передача владения

title правовой титул, право собственности; transfer of title передача права собственности

bill of sale купчая

security обеспечение; гарантия; залог

pay by installments выплачивать частями

goods pledged заложенные вещи

custom of trade торговый обычай

Text 3 Other Types of Sales Transactions