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E-Book Series 2

András Petz

Contracts and parties
Agency-type contracts
Contracts for building construction
Contracts for services
Contracts for various leases

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 .

The dealer in this respect is a commercial agent. Franchise Contract A contract under which one party (the franchisor) grants the other party (the franchisee). know-how and business method along with business experience. typically by concluding a contract between the principal and the third party. and the agent agrees to sell them. The distribution contract regulates the conditions of such supply. Dealership Contract A contract under which one party. The unsold goods or products will be returned by the agent to the consignor. The consignor usually pays commission to the agent for the services rendered under the consignment contract. Agency-type contracts Agency is a basic legal concept whereby the agent represents the principal in various relations. Consignment Contract Consignment is a combination of a type of agency and sales contract. or to take and pay for them. whereby the consignor delivers certain goods or products to the agent. Though it is originally between principal and agent. the concept is applied in various legal arrangements between parties. Agency contract This is the basic legal document used generally for situations where the agent is authorised and instructed to directly affect the legal position of the principal in relation to a third party. Distribution Contract A contract under which one party. agrees to supply the other party. where one acts in advancement of the interest of the other.Theory | Intro Contracts and Parties 2. who acts as an intermediary between the producer/manufacturer (that is the principal) and the individual buyer. and the distributor agrees to purchase them. and under which the franchisee has the right and the obligation to use the franchisor’s trade name or trademark or other intellectual property rights. the distributor. the supplier. The civil law tradition | 3 . the principal. and the principal agrees to remunerate the dealer for those activities. agrees to act on a continuing basis as a self-employed intermediary to negotiate or to conclude contracts on behalf of another party. the right to conduct a business (franchise business) within the franchisor’s network for the purposes of supplying certain products on the franchisee’s behalf and in the franchisee’s name. generally called dealer. and to supply them to others in the distributor’s name and on the distributor’s behalf. The consignment contract is also called a contract for sale or return. with products on a continuing basis. in exchange for a consideration.

Turnkey contract A contract for home building which provides for a degree of readiness that the client is able to move in. The building so erected is ready to be used from the moment of delivery. This arrangement allows a much higher degree of flexibility in contrast to a lump sum contract. who is responsible for the entire process. As the construction works will result in a building or other structure that people will live in or otherwise use on a permanent basis. The unit price contract guarantees that the price of labour and materials can be precisely budgeted and will not be subject to fluctuation. The costs of the work which were not originally planned but required for the implementation of the work will be born by the contractor. A unit price contract is also referred to as fixed price contract. plus a fee covering the costs of the contractor and the profit. Unit price Contract A contract in which the contractor charges a fixed sum for each completed unit of work. The building process is completely in the hands of one contractor.Intro | Theory Contracts for building construction Construction contract Construction contract is the most general title of a contract for performing building construction activity. In exchange for a higher level of responsibility. Non-compliance with such requirements may result in the withdrawal of the licences to perform building construction activity. the contractor usually receives a higher contract sum. The control over the entire process of design and construction will result in less problems arising therefrom. It can be used for projects ranging from single buildings to large-scale developments. Such fee can be calculated either as a lump sum or percentage of the total costs. where the extra costs will be added to the contract sum. In fact. in most countries this activity is heavily regulated by the law. It is often used to vest all responsibility in one entity in order to minimize risks for the client. 4 | The civil law tradition . Cost-plus Contract An arrangement under which the contractor is paid for the actual cost of materials and labour. Design/Build Contract A type of construction contract in which the design and construction services are contracted by a single entity called design–build contractor. Additional works may be ordered by the client. Lump Sum Contract It is a type of contract whereby the contractor carries out work for a stated amount of money. This type of construction contract can be used when the requirements of the client for the services are known but the volume is not clearly defined at the time of making a contract. In this case the contractor bears all risks arising from the construction. it is a combination of a construction contract and a design contract.

for the completion of a project. It is usually used for commercial purposes. these contractors often lack the capacity to implement all the projects undertaken in tender processes. It specifies the scope of services and the compensation therefore. Subcontract A contract made between the contractor and the subcontractor. which set forth the condition generally applicable provided that no deviations are specifically agreed in the special conditions. where a contract has been awarded to a company or group of companies forming a so called consortium. namely that the contractor will under no circumstances be considered a partner or employee of the client. Project management contract A contract between a client and a service provider to determine the conditions of the services rendered in different phases of a construction or design project. and the tenant will then lease the property for a certain period of time. usually following the award of a tender. Subcontractors are engaged by several main or general contractors. The civil law tradition | 5 . and the organization of the activities are assigned to a company specialised in such activity. where the owner specifies unusual or unique features. The work may range from construction and repair to more sophisticated activities. In this case. General contract A general contract may be used in complex construction projects. under which the subcontractor will be assigned certain activities that the main contractor or the subcontractor wishes to outsource. the main contractor often involves a general contractor with overall responsibility for the implementation of a construction project. Entities in the public or private sector with limited capacity to coordinate large scale projects often enter into project management agreements to ensure appropriate control over the construction process. where the specific requirements of the future tenants are of key importance. It is useful when the client needs to involve an independent project management for development and construction. It is used in situations where the tenant does not wish to own the property for tax or accounting purposes. The owner complies with those requirements. Do not confuse this contract with the legal document referred to as "general conditions". Main contract A contract concluded between a contracting entity and a client. However. Subcontractors are often specialists of a certain field in which they are capable of providing services at a high quality. Build to suit contract A contract between the owner and the contractor. The main contractor is often a reputable and financially strong company with good references.Theory | Intro Contracts for building construction Independent contracting agreement A basic document used in various industries for situations where a contractor agrees to perform some work ordered by the client. The nature of this contract focuses on the independent status of the contractor.

product or type of service. Contract for accounting services A contract under which an accountant provides accounting services to a client. Contract for the sale of advertising space A contract in which the client buys advertising space in electronic or printed media either directly from it or indirectly from an agency. The term "creative" in this context often refers to the person who performs the creative services.. The exact method of submitting the advertisement must clearly be specified. Contract for providing internet content A contract in which the provider creates various types of internet content to be used on the websites and other electronic materials of the client for a one time or regular fee. Contract for creative services A contract in which a creative person or agency provides assistance in creating a new design. The number of possible variation of contracts for services are infinite. launching a new product into the market. The contract must specify the expectations of the client which is often presented in the form of a brief. as it was the practice for many years. Contract for advertisement services A contract between an advertising agency or media and a client promoting its goods or services by advertising through the printed or electronic media. The creative work may be performed manually. including the scope. Contract for market research services A contract between a client and a researcher whereby the latter conducts complex market analysis in subjects specified by the client for a mutually agreed fee. The accountant performs the bookkeeping activities. including the balance sheet and the profit and loss statement. Liability for the content and any intellectual property right issues should be clearly regulated in the contract. The contract specifies the price which is often based on the list price and a discount expressed in percentage. 6 | The civil law tradition . liability and compensation.Intro | Theory Contracts for services For the purposes of this category. too. for example. The exact content of the market research may vary from simply gathering information about a subject to a complex research work aimed at. including the recording of financial transactions. It includes services to act in a certain way and to bring about a result. which is becoming the generally accepted method of performing this type of services. as well as the means of eventual modification thereof. preparing the sub-ledgers and the general ledger. The scope of the services may be either a one time development of a website content or the provision of content on a regular basis to secure a stable advantage to the client in terms of search engine optimization. any type of service can be the subject of a contract. and compiling documents related to the annual report. The contract regulates the most important conditions. The list below is merely an attempt to collect the contract types that lawyers will most frequently encounter in their practice. or on an electronic platform.

Contract for call centre services A contract under which the service provider operates a call centre to manage customer service calls. Additionally. Contract for training services A contract between a training service provider and a client regulating the conditions of the training programme. Contracts for IT services focus a lot on the exact scope of the services. The contract regulates the translation process of delivering the source and the target material. the expert advice of the consultant is likely to reduce costs. as well as the liability for the consequences of inapt advice. level of difficulty. the contract is formulated not only by legal requirements but also the generally accepted practices of the field. Contract for translation services A contract made between a client and a provider for providing translation services into a foreign language. The contract determines level of services to be provided based on certain parameters. exact description of the qualification that may be obtained after the successful completion of the training programme. Since IT is a relatively new field. Contract for database management services A contract which regulates the conditions of various activities related to managing a database owned by the client. the tuition fee and other issues. the various types of translations and the fees in function of the completion deadline. the exact programme. like the provisions for bearing various costs and liability for eventual failures. which may range from simply organizing a press conference to performing more complex activities such as rolling out a communication campaign or performing all communication activities of a company. the engagement of a consultant may help the client avoid pitfalls that inexperienced clients would likely fall into.Theory | Intro Contract for PR services A contract between a PR service provider and a client. Sometimes a framework contract is concluded and the individual orders are placed in a statement of work. as well as the various other aspects of the work. Contract for consulting services Also called consultancy agreement. like methodology. On the one hand. Special focus is paid on the provisions related to data protection. regulating the scope of the public relation services. as well as issues pertaining to data security and the liability for the eventual errors of database management. the quality assurance process aimed at maintaining consistently high quality. The consultancy agreement regulates the scope of such services in detail. it is an agreement between the client and the consultant or expert to provide professional consulting services. The civil law tradition | 7 . Contract for IT services A contract for providing various types of services in the field of information technology. as well as handling issues related to intellectual property rights. including the duration and the schedule. Consultancy services are used in many different situations where some type of special knowledge or expertise is to be involved in a process. The contract determines the exact scope of the services.

It is a typical lease for personal property. Since this is often a means of ensuring the habitation of people. The property is used by the lessee. The additional advantage of equipment lease is that the cost can be accounted every month instead of depreciating fixed assets over the lifetime of the assets. Financial lease A lease arrangement used for financing the purchase of assets. Manpower lease The temporary placement of manpower from a company specialised in such services to another in case of the temporary shortage of human resources. Car lease The legal term for a car rental provided by agencies specialized in this type of activity. Property lease contract A lease contract typically concluded between landlord and tenant for obtaining the use of real property in exchange for regular payments called rent. a company will not have the assets in its balance sheet but will still have control over them. As a result of the synthetic lease. The items to be leased may range from computers through office equipment to production machinery. if no lessor is involved in the transaction. Synthetic lease A financing arrangement under which the assets in question are purchased by a financing party and then leased to the lessee under operating lease. by the financing party. many jurisdictions require that property lease contracts. The financing party provides the fund for purchasing the property. This arrangement sometimes involves three parties. Equipment lease A lease agreement between the lessor and the lessee.Intro | Theory Contracts for various leases Operating lease Operating lease is the traditional lease arrangement. The advantage from a company's perspective is that it does not have to employ a large number of employees. but may use the services of persons not on the payroll. The term "operating lease" is often used to differentiate this from a "financial lease" arrangement. in which lessee may use certain fixed assets for a sum payable at regular intervals. usually based on a simplified contract reduced to a form to comply with the benefit of convenience. whereby the lessor has no other right than to use the property in question for a certain term in exchange for the payment of rent. as well as leases in excess of a certain sum. while the title of ownership to the property is retained by the lessor. which is basically used for financing the purchase of assets. with much more flexibility. or. 8 | The civil law tradition . whereby the funds are provided by an additional party referred to as financing party. be in writing. which is typically a bank or other credit institution. which is usually owned by the lessor.

c. c. franchise agreeement 3. manpower lease d. consultation contract c. contract for services c. property sales contract c. 2. consignment contract 6. construction agreement 7. d. b. property lease contract b. consulting agreement d. dealership agreement d. c. 1. distributor a. Determine which contract they are parties to. distribution contract d. project management contract c. lessor & lessee a. client & main contractor project management contract lump sum contract consignment contract agency contract 4. construction contract d. distribution contract b. lump sum contract 5. client & placement agency a. d. agreement in principle principal agreement agency agreement contract to sell a. contract for the sale of advertising space b. Determine which contract they are parties to. financial lease b. client & selected contractor a. b. subcontract 8. d. sales contract c. a. d. synthetic lease b. b. principal &. b. c. d. b. producer & reseller a. lessor & lessee operating lease build to suit contract for accounting services main contract 3. client & dealer a. consignment contract d. subcontract c. financial lease 4. turnkey contract c. operating lease c. sublease d. distribution contract d. d. provider & client distribution contract contract for translation services property lease contract subcontract 5. financial lease distribution contract franchise contract project management contract contracting agreement 6. c. services agreement b. consignor & agent a. consignment contract 7. consultation agreement d. provider & client a. main contract b. design/build contract c. build to suit contract b. a. principal & agent 1. client & builder dealership agreement turnkey contract franchise contract financial lease 2. consignment contract b. manpower lease c. client & consultant a. client & contractor a. contract for services b. car lease 8. operating lease d. EXERCISE II. a. building contract The civil law tradition | 9 . b. lessee & financing party a.Terminology | Intro EXERCISE I. c. a.

principal a. accounting a. seller 8. client 3. consultant a. fixed price 6. tenant c. Independent contractor's agreement a. distributor c. consignee c. ballon payment d. contract for sale d. agent d. disposal 4. general contract b. lessee a. project management c. variable rate c. manpower lease d. contractor a. client a. construction a. subcontractor a. franchisor 7. subcontract 8. main contractor b. drug services c. owner 2. provider c. In this exercise you only have ONE choice. general contractor d. consultation d. lessor 5. unit price b. lessee d. lessee b. consignment a. client b. registration d. contracting agreemeent c. charging c. lump sum a. build to suit 3. provider c. specialist c. consignor d. agent a. owner c. principal b. franchise c. consolation c. contractor d. building b. buyer d. contract for sale or return 7. provider c. auditing 5. consummation 2.Intro | Terminology EXERCISE III. EXERCISE IV. client 1. consultancy b. bookkeeping b. contract to make a will b. financing party b. consultation a. owner 4. Please note that you have TWO correct choices. supplier a. consulency d. contract to sell c. buyer d. dealership a. buyer b. agent b. distribution a. Find the synonym of the following terms. buyer d. Choose the counterparty of the following parties. consignment 10 | The civil law tradition . commercial agency b. manpower lease d. 1. buyer b. consulting d. accountant 6. reselling b.

general contract . d. a. property lease contract d. A contract concluded between a contracting entity and a client. True b. a. agency contract a. False 8. consignment contract d.operating lease a. a. financial lease . c. construction contract .Terminology | Intro EXERCISE V. True b. independent contractor's agreement . False 2. general contract 6. True b. usually following the award of a tender. and the agent agrees to sell them.reselling agreement a.build to suit contract 5. False 4. contract to sell 7. franchise contract 4.building contract a. b. A contract for home building which provides for a degree of readiness that the client is able to move in immediately after completion a. unit price contract . distribution contract . A contract under which one party grants the other party in exchange for a consideration. consulting contract c. False 5. What do the following definitions stand for? 1. subcontract 3. True b. subcontract . False 3. lump sum contract . unit price contract b. project management contract c.cost-plus contract a. True b.general conditions a. True b. A lease contract typically concluded between landlord and tenant for obtaining the use of real property in exchange for the rent. subcontract main contract agency contract consignment contract 2. turnkey contract b. franchise contract c.contract for sale or return 1. for the completion of a project. A type of construction contract whereby the contractor charges a fixed sum for each completed unit of work ordered by the client a. False The civil law tradition | 11 . a. contracting agreement b. project management contract c. False 10. False a. False 6.fixed price contract a. contract to sell b. Is it true that the following contracts are the same? EXERCISE VI.A contract under which the principal delivers certain goods or products to the agent. consultation contract d. consignment contract . consuling agreement d. the right to conduct a business within the others network. property sales contract b. True b. True b.subcontracting agreement a. subcontract d. True b. consignment contract c. True b. design/build Contract . False 9.contracting agreement a.

1 b. order our book on the "Terminology of Civil Law" and learn everything there is to know about legal terminology. 7 a. 8 c EXCERCISE II. a 6. 1 a. but you are too busy to attend classroom trainings. True 5. our E-LEARNING COURSE on the terminology of contracts for sale and work might just be perfect for you. 3 a. 1a 2a 3a 4a 5d 6d 7b 8a EXCERCISE V. b 2. 6 a. 4 c. Click HERE to place your order now! . False 3.3 a. False 9. c 4. False Exercise VI.Intro | Terminology KEY TO EXERCISES We hope you have found our e-book useful and managed to improve your knowledge of the different contract types and the parties thereto. True 7. True 8. a 3. 8 a EXCERCISE III. 1.c 8 a. 5 b. 4 b. b 12 | The civil law tradition If you would like to take your knowledge to an advanced level.c 4 a. True 2. 5 b.b 5 a. EXCERCISE I.d 6 c. 1. 6 d. True 10. False 6. 2 b. True 4. If you would like to learn more. c 5.c EXCERCISE IV. 7 a.d 2 a. 2 c. 1 c.d 3 a.d 7 b.