экзамин англ

1

Persons can be natural and legal.

Legal entity or juristic person means an entity, such as corporation, that is recognized as having legal personality, i.e. it is capable of enjoying and being subject to legal rights and duties. It is contrasted with a human being, who is referred to as a natural person or individual.

A corporation is a legal entity created under the authority of the legislature. Its principal characteristics include a) limited liability, b) free transferability of interests, c) centralized management and control (a board of directors and officers), d) continuity of existence (perpetual existence).

The principle difference between a natural and a legal person is that a legal person has legal personality. LP means that a legal person enjoys its own rights and performs its own duties, may make contracts in its own name and may sue and be sued in court. But the most important feature of this concept is limited liability of corporate members. Thus the companies members liability for corporate debts is limited to a fixed amount. Another thing that is worth mentioning is that companies and corporations have their own separate legal personality while parterships do not; even if people, running the comp. are constantly changing, the comp. itself retains its identity.

Corporate personality provides for corporate vail for members of the comp, which means that they are not liable for the comp.’s debts. Sometimes corporate vail can be lifted in case of fraud, a criminal offence, misconduct of the members of the company.

Partnership is divided into general partnership, joint venture and limited partnership. A general partnership is an association of two or more persons who are engaged in business as co-owners. A partnership does not have a legal personality of its own and therefore partners are liable for the debts of the firm. On leaving the firm they remain liable for debts already incurred; they cease to be liable for future debts if proper notice of retirement has been published.

A joint venture is essentially a partnership formed for some limited investment or operation. Joint ventures are governed by most, if not all, of the rules applicable to partnerships.

Limited partnership is a partnership consisting of two classes of partners: general partners (with rights and obligations as in an ordinary partnership) and limited partners (with no control and limited liability).

2

Bankruptcy is a legally declared inability or impairment of ability of an individual or organizations to pay their creditors. Creditors may file a bankruptcy petition against a debtor («involuntary bankruptcy») in an effort to recoup a portion of what they are owed. In the majority of cases, however, bankruptcy is initiated by the debtor (a «voluntary bankruptcy» that is filed by the bankrupt individual or organization).

Trustee in bankruptcy, a person who acquires title to the debtor’s property (the estate) and administers the estate by collecting and liquidating assets, as well as deciding claims; the trustee has numerous powers and is in charge of distributing the estate to creditors.

1. The trustee acquires title to all of the debtor’s property (“the estate”) and administers the estate by collecting and liquidating assets as well as deciding claims.

4. The trustee must be qualified insolvency practitioner.

A Trustee in Bankruptcy is a person who is appointed by court (in some countries by the creditors involved in a bankruptcy case).

The trustee gathers the debtor’s non-exempt property, manages the funds from the sale of those assets, and then pays expenses and distributes the balance to the owed creditors.

The trustee is responsible for receiving the debtor’s monthly payments and distributing those funds proportionally to the debtor’s creditors. The Bankruptcy Trustee will act on behalf of the debtor to guarantee that both the creditors’ and the debtor’s interests are maintained in accordance with the bankruptcy laws, and will often be required to act as a negotiator between the two parties.

http://www.arbitr-nsk.ru/content/view/58/53/

3

The Russian Bankruptcy Law was signed by President Yeltsin on January 8, 1998; its substantive provisions became effective retroactively on January 1, 1998. It is the third bankruptcy law adopted by the Russian Federation.

The Russian Bankruptcy Law governs the bankruptcy of natural and legal persons. It contains special provisions for large employers, called “town-forming” organizations, agricultural organizations, insurance organizations, professionals engaged in the securities business, individual farmers, individual entrepreneurs, credit organizations and citizens. Credit organizations are also the subject of separate legislation providing detailed guidelines for the bankruptcy of these entities. Certain government-owned enterprises that are operated pursuant to statute and are scheduled to be privatized by 1999 are excluded from the provisions of the Russian Bankruptcy Law.

This Article discusses bankruptcy proceedings with respect to the reorganization of enterprises, including town-forming enterprises. It does not address any of the other provisions governing specific types of entities or natural persons.

With respect to enterprises, the Russian Bankruptcy Law provides for three kinds of bankruptcy administration, during which the enterprise is to be declared solvent, restructured or liquidated. Prior to a formal declaration of bankruptcy, an enterprise is subject to “observation proceedings” for a period of three months, which can be extended for an additional two months. During observation proceedings, the arbitration court collects information about the management and the financial status of the debtor in order to determine the appropriateness of formal bankruptcy administration. The arbitration court appoints an interim manager to monitor the debtor’s management, preserve the assets of the debtor, analyze the debtors financial status, ascertain whether there are indicia of deliberate or fraudulent bankruptcy, and to convene the first creditors’ meeting. During this period, the Russian Bankruptcy Law envisions that the debtor’s management will continue to operate the enterprise, although the arbitration court is empowered to remove the management for cause, such as for hindering the interim manager.

Following observation proceedings, the arbitration court, based on a decision of the creditors’ committee or the court’s own determination that the debtor can be restored to solvency, may declare the debtor subject to external administration, the method of reorganizing a debtor enterprise under the Russian Bankruptcy Law. At the commencement of external administration, the arbitration court appoints an external manager, selected by the creditors, who assumes the responsibilities of the debtor’s management, subject to supervision and control by the arbitration court and the creditors. The external manager is obligated to present a plan of external administration within one month after appointment.

Under the plan, the external manager must seek to restore the enterprise to solvency by selling assets, selling the enterprise, reaching agreement with the creditors to reschedule debts or otherwise satisfying their claims in full performance of the debtor’s obligations, including by means of the assumption of debts by new entrant third parties, or such other methods as may be accepted by a majority of creditors present at the creditors’ meeting. The period of external management may last no more than twelve months, with a six month extension by the court, subject to a possible further extension by the arbitration court based on the petition of the creditors after their review of the external managers’ report at the end of the year and a half period of external administration.

If external management fails, or if the enterprise is deemed unsuitable for reorganization, the arbitration court may order the liquidation of the debtor’s assets under “competitive proceedings.” In such a case, the arbitration court appoints a competitive proceedings manager who temporarily manages the debtor, sells its assets, and makes distributions to creditors according to the priority scheme provided under the Russian Bankruptcy Law. Competitive proceedings last up to one year, with a possible extension of six months by the arbitration court.

During any of the proceedings described above, the debtor and its creditors may conclude an amicable agreement. The agreement must be approved by the creditors. Third parties may enter into an amicable agreement with the debtor and its creditors in order to acquire rights to, and assume obligations of, the debtor. The rights that third parties can acquire in a debtor enterprise include ownership of the debtor entity. Notably, there is no restriction against the State entering into an amicable agreement in order to gain ownership of a debtor. An amicable agreement is subject to the requirement that the claims of the creditors in the first and second order of priority must be satisfied.

The order of priority of creditors under the Russian Bankruptcy Law is as follows:

First, the claims of citizens to whom the debtor is liable for harm to life or health;

Second, claims for severance pay, wages, and royalty payments;

Third, claims of secured creditors. If pledged property is insufficient to satisfy the claim of a secured creditor, the remainder of the claim is an unsecured fifth priority claim;

Fourth, claims of government bodies for compulsory payments and payments to extra-budgetary funds (such as taxes and pension payments), except for fines and financial sanctions;

and

Fifth, unsecured claims, government imposed fines, and all other claims.

Other laws define significant rights affecting the bankruptcy process. These laws include the Civil Code, the laws on privatization, entrepreneurial activity, and ownership. Some of these laws appear to conflict with provisions in the Russian Bankruptcy Law. For instance, the Law of the Russian Federation on Enterprises and Entrepreneurial Activity appears to provide a workers’ collective with the power to veto an owner’s decision to liquidate or reorganize an enterprise.

Because there is little jurisprudence established by the arbitration courts, we have no indication as to how these kinds of disputes will be resolved. Therefore, this Article considers the Russian Bankruptcy Law in isolation. The reader should be aware that other provisions may be introduced into law that conflict with the outcomes under the Russian Bankruptcy Law as described herein.

наблюдение — процедура банкротства, применяемая к должнику в целях (for the purpose of conserving the debtor’s property) обеспечения сохранности имущества должника, проведения анализа финансового состояния должника, составления реестра требований кредиторов (the creditor claims register) и проведения первого собрания кредиторов (to cause the initial creditors’ meeting to be held);

финансовое оздоровление (financial rehabilitation) - процедура банкротства (the bankruptcy procedure), применяемая (which may be applied) к должнику в целях восстановления его платежеспособности и погашения задолженности в соответствии с графиком погашения задолженности (the debt repauyment schedule);

внешнее управление — процедура банкротства, применяемая к должнику в целях восстановления его платежеспособности (to restore its solvency);

конкурсное производство — процедура банкротства, применяемая к должнику, признанному банкротом, в целях соразмерного удовлетворения (to fairly satisfy) требований кредиторов;

мировое соглашение — процедура банкротства, применяемая на любой стадии рассмотрения дела о банкротстве в целях прекращения производства (to effect termination/ to terminate) по делу о банкротстве путем (by means of/ through) достижения соглашения между должником и кредиторами;

временный управляющий — арбитражный управляющий, утвержденный 09щ лбарбитражным судом для проведения наблюдения в соответствии с настоящим Федеральным законом;

административный управляющий — арбитражный управляющий, утвержденный арбитражным судом для проведения финансового оздоровления в соответствии с настоящим Федеральным законом;

внешний управляющий — арбитражный управляющий, утвержденный арбитражным судом для проведения внешнего управления и осуществления иных установленных настоящим Федеральным законом полномочий;

конкурсный управляющий — арбитражный управляющий, утвержденный арбитражным судом для проведения конкурсного производства и осуществления иных установленных настоящим Федеральным законом полномочий;

5

Consent

As noted above, a contract involves a «meeting of the minds». For this, all parties must be capable of consent.

It is a common feature of corporation legislation to give companies the ability to contract, as long as their contracts are within the scope of their stated purpose. To get around this, many companies make sure their incorporation documents are very generally worded so as to prevent any restriction on their ability to contract.

With mentally-challenged persons, the contract may be void or voidable at the minor’s or mentally-challenged person’s option. With children, contracts can be voided at their request if they are not beneficial to the child. One exception exists and that is a contract for necessaries of life. The rule was stated in a 1925 case, Miller v. Smith & Co., in which the judge said an » infant may bind himself to pay for his necessary meat, drink, clothing, medicines and likewise for his teaching or instruction.» Remember also that if a minor ratifies a contract upon reaching the age of majority, he or she is then bound to it.

The situation is different with regards to a person judicially declared to be mentally incompetent. Here, the contract is voidable at the option of the incompetent person if the other party knew about the mental incompetency or ought to have known under the circumstances. Again, an exception is made for contracts for the delivery of necessaries of life for which even a mentally incompetent person would be liable.

A totally drunk person also lacks the ability to consent to a contract and has the option of voiding a contract signed while intoxicated, providing it is done at the earliest opportunity upon sobriety.

«Capacity to buy and sell is regulated by the general law concerning capacity to contract, and to transfer and acquire property; except that where necessaries are sold and delivered to a person who by reason of mental incapacity or drunkenness is incompetent to contract, he must pay a reasonable price for them. Necessaries … means goods suitable to the condition in life of the person, and to his actual requirements at the time of the sale and delivery.» {section 7 of B.C.’s Sale of Goods Act.}

A contract accepted under threat of physical, mental or economic harm, may be voided by the party so threatened. Acceptance must be freely given. The same is true for contracts entered into between persons in a relationship of power imbalance. The law calls this «undue influence» and it will be presumed in some cases such as parent-child, trustee-beneficiary or doctor-patient contracts. The case law offers two varieties of undue influence. Duress is a common law doctrine and, technically, includes the element of compulsion. Contracts executed under duress are voidable. Undue influence per se is an equity remedy and involves the «unconscientious use by one person of power possessed by him over another in order to induce the other to enter a contract. Duress falling short of the common law requirements may also constitute undue influence in equity (Brooks v. Alker 1975 DLR 577).

Another category of contract situations where consent seems to be fatally affected are what the law calls «unconscionable» contracts. This is a slippery area of the law which suffers from a lack of judicial unanimity. In essence, the theory is that the court will rescind contracts which are totally unfair and, while just short of being fraudulent, are considered «unconscionable.» Although legal academics try to do so, it is difficult to intellectually differentiate this from the theory of undue influence discussed above because, in both cases, it deals with a power relationship imbalance and the taking advantage of this imbalance. Also, opening up the flood-gates of judicial review of contracts on the grounds of «unconscionability» could result in a plethora of contracts being brought to court as every person who had improperly negotiated a contract would seek judicial relief. Luckily, many provinces of Canada have enacted consumer protection legislation which allows the cancellation of consumer contracts within a certain time. This legislation was designed to cover most of the situations that the contract common law claim of «unconscionability» might have alleviated.

6

OFFER means an indication of willingness to do or refrain from doing something that is capable of being converted by acceptance into a legally binding contract.

Offer

Each contract requires an offer and acceptance of that offer.

«… to constitute a contract, there must be an offer by one person to another and an acceptance of that offer by the person to whom it is made. A mere statement of a person’s intention, or a declaration of his willingness to enter into negotiations is not an offer and cannot be accepted so as to form a valid contract» (Acme Grain Co. v. Wenaus, 1917).

An offer must be a clear, unequivocal and direct approach to another party to contract. For this reason, advertisements, catalogues or store flyers are not offers. Nor is a «for sale» sign on a used car. The law calls these «invitations to treat»; essentially invitations to the general public to make an offer on a particular item. But, even here, there have been exceptions. For example, in a 1856 case, an advertisement of train rates was held to be a valid offer. Much depends on the wording of the «invitation».

An offer, once made, can be revoked before acceptance unless it is under seal. An offer can also expire if a deadline for acceptance passes. If there is no specified deadline, then the offer expires in a «reasonable time», depending on the subject-matter of the contract. For perishable goods such as food, a «reasonable time» would likely be a matter of days. The «reasonable time» would be longer where the subject matter of the contract is a building.

“A woman answers an ad guaranteeing removal of facial hair. Treatment fails. Was there a contract? The judge thought so. The ad was the offer. Relying on the Carbolic Smoke Ball case (see below under Acceptance), the judge added: «if the vendor’s self-confidence persuaded her into an … extravagant promise, she cannot now escape a complaint from a credulous and distressed person to whom she gave assurance of future excellence and relief from her burden. The weak unfortunate person, however gullible, can be sure that the courts … will not permit anyone to escape the responsibility arising from an enforceable contract.»

7

ACCEPTANCE means agreement to the terms of an offer that, provided certain other requirements are fulfilled, converts the offer into a legally binding contract.

Acceptance

Acceptance validates the contract; it gives it life. It is at that moment that a contract exists; that there is consensus ad idem (assuming a valid offer and consideration). It also must be clear, unequivocal, unconditional and made by the person to whom the offer is intended.

It is not enough to say that you find the offer to be «agreeable»; you must «accept» the offer although your acceptance can be implied by your conduct. It must also be brought to the direct attention of the offeror before a valid contract exists.

Conduct can amount to acceptance in the proper circumstances such as the delivery of the goods mentioned in the offer. The courts have laid down two conditions for conduct to be equated with acceptance:

that the conduct was an expression of acceptance and not done for some other reason or motive, and

that the action or conduct was intended as acceptance.

If a judge were called upon to assess conduct for this reason, the judge would not weigh the acceptor’s conduct subjectively, but would decide if a «reasonable person» would infer acceptance from that conduct.

The offeror can dictate the terms of the acceptance. Offers may set certain conditions on acceptance and to these, the acceptor is bound. For example, the offer may require acceptance in writing (if such a requirement has not been made, then a written offer may be accepted verbally.) In one case, a mobile home was purchased. With the home came a warranty card which had to be returned to the manufacturer for it to be held valid. The card was not sent to the manufacturer. The warranty was said to not apply because the purchaser never accepted the manufacturer’s offer.

To this legal quagmire, should be added those rare situations where someone puts out an offer at-large, such as the Carbolic Smoke Ball Co. did in 1893. The company put a sum of money on deposit with a bank and said they would pay this money to anybody who got influenza while using their product. Well, a consumer caught influenza. The courts held that a special «unilateral contract» could be created in these circumstances and the Smoke Ball Co. had to pay up.

One trick offerors sometimes attempt is to say that the proposed acceptor’s silence will amount to acceptance. This is invalid and cannot have the effect of forcing a person to a contract without the requisite of positive acceptance, delivered to the offeror, either in words or conduct.

Another game potential contractors play with one another is called the «battle of the forms». This happens when, for example, I send you an offer and you amend it slightly and then send it back signed but amended! This action destroys the original offer and is not acceptance. It is a new offer entirely, called a counter-offer. Only if the person who submitted the original offer accepts the counter-offer, would you have yourself a contract.

One interesting problem that has surfaced in contract law is the use of modern technology in the communication of an acceptance. It has led to an exception to the general rule that acceptance must be personally delivered to the offeror. In the absence of specific instruction to the contrary by the offeror, a person may mail an acceptance to the offeror and the contract is said to be perfected when the acceptor places this acceptance in the mail box for return mail even if, in fact, it never reaches the offeror. This is known as the «postal rule.» If the post office loses or delays the acceptance letter, there is still a binding contract. The rule was summarized in a 1892 case Henthorn v. Fraser as follows: «Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted.»

If the acceptor decides to use another means of delivery than that requested by the offeror, then the acceptor assumes any risk associated with that means of communications; if nondelivery occurs for technical reasons, there is no contract.

The implications of the above used to be important in determining not only where the contract was made but then, under which law will the contract be subject? The general rule is the law of the state where acceptance was brought to the offeror’s attention, except for situations where the «postal rule» applies. Then, since the contract is perfected wherever the acceptance is posted, it would be that law which would apply. However, courts no longer solely rely on those strict rules for deciding which law to apply to a contract. A fairer, more general rule now applies wherein the laws of the state with which the contract has the «closest and most real connection» will apply. As this is an area of the law that is uncertain, many contracts specifically state which laws will apply to resolve any dispute about the contract.

A contract requires a meeting of the minds, which Roman law called a consensus ad idem. If one or both parties have been mistaken about an element of the contract, then there is no consensus ad idem. But that does not necessarily mean that the contract is void. Such a rule could breed abuse. So the common law has tried to develop a fairly sophisticated set of rules for dealing with mistake. Unfortunately, as with so much of contract law, the final determination of what those rules are is still up in the air, moving with the changing currents of the courts.

The postal rule does not apply if (1) the express terms of the offer specify that the acceptance must reach the offeror and (2) if, having regard to all the circumstances, including the nature of the subject-matter under consideration, the negotiating parties cannot have intended that there should be a binding agreement until the party accepting an offer … had in fact communicated the acceptance or exercise to the other.» See also the Saskatchewan River Bungalows case in the Page 3 From the Case Books section where wording such as «the acceptance must be received at the head office of X» would preclude the postal rule unless there had been representations that communication by mail was acceptable or encouraged.

8

Consideration

One of the other important elements of contract law, which is difficult for the non-lawyer to understand, is the requirement of consideration. One 1875 English case, Currie v. Misa, offered a definition of «consideration» which is still used:

«.. some right, interest, profit or benefit accruing to the one party or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other.»

As such, a contract differs from a gift. This also explains why you sometimes hear of very expensive objects sold for $1; which is done to ensure that what is essentially a gift, comes with the legal protection of contract law.

Under contract law, there is no contract if there is no consideration.

But consideration does not necessarily have to be quantified or quantifiable in monetary terms. Any discernible detriment to one of the parties could be that party’s consideration. In one case, Hubbs v. Black, 1918, agreeing not to take a certain plot in a cemetery was considered to be sufficient consideration. Giving a right to sue on a «bona fide» claim has been deemed to be adequate consideration. Also, the courts don’t really care about the adequacy of the consideration. This is the business of the parties and not a matter for judicial interference. Some other notes on consideration:

The consideration must be reciprocal, each party offering consideration.

Motive is different from consideration. Your motive for contracting is your personal reason for contracting. It may not coincide with the consideration you are giving, or receiving, as part of the contract.

If a consideration is already «spent» in a prior contract, a new contract using that same consideration would be valid. In the words of one law professor (The Law of Contract in Canada, G. Fridman): «where a contractual duty already exists, it may be possible…to vary the original agreement without necessarily establishing a whole new contract with fresh consideration on both sides.» In fact, refreshing a commitment to do something for a third party is consideration under common law.

The consideration cannot be something or some act which is illegal, immoral or contrary to public policy (see also the section on Restraint of Trade contracts below). If a certain act is punishable by some law, then it is «illegal». An example would be a work contract to an unlicensed electrician.

9

Privity of contract

One sure sign of the personal nature of contracts is that no one but one of the parties can go to court and enforce the contract even if the contract was to operate to a third party’s benefit. This is known as the «privity of contract» rule. There are exceptions to it:

Agents, or employees who obviously accept or offer a contract not in their own personal names but on another person’s or a corporation’s behalf. In these situations, the contract is said to be signed by an «agent». The person employing the agent is called the «principal» and the principal could sue or be sued under contracts entered into by his or her agent even though the principal id not sign the contract directly.

Another exception allowed under special laws is cheques and promissory notes (which are really just miniature contracts but contracts nonetheless). In these cases, enforcement rights are created by special laws between non-signatories as the cheque exchanges hands, from one bank to another or from one person to another.

Contracts that restrict or impact upon the use of land (eg. an easement) may be enforceable upon the next land-owner, even though they were not privy to the original contract. This is an old exception to the rule of «privity of contract» that is still applicable today.

The law of trusts, where a person may contract to the benefit of another, operates to convey certain rights to the third party even though, in fact, this third party was not party to a contract which created the trust.

10.

Misrepresentation

Misrepresentation is when one of the parties to a contract made a wrong statement about some material element of the contract and, because of this statement, the other party entered into the contract. Contract common law treats fraudulent misrepresentation differently from innocent misrepresentation. In his book The Law of Contracts in Canada, 1994, p. 295, Professor G. Fridman says there are four conditions that must be met before a court will accept that there has been fraudulent misrepresentation:

«(1) that the representations complained of were made by the wrongdoer to the victim (before the contract); (2) that these representations were false in fact; (3) that the wrongdoer, when he made them, either knew that they were false or made them recklessly without knowing whether they were false or true; and (4) that the victim was thereby induced to enter into the contract in question (a legal presumption exists in this regard)» (emphasis added).

Notice that the courts will not entertain a request to rescind a contract if the representation was merely a puffed-up opinion on a particular product. Parties should know better than to give full credence to commercial aggrandizements. Nor will a misrepresentation on the law be a cause for judicial intervention under this heading, and for the same reasons as given above: everyone is presumed to know the law. Silence can be construed as misrepresentation in certain circumstances.