TERMINOLOGY | SALES

E-Book

AAndrás
ndrás P
Petz
etz

CONTRACTS

BASICS OF CONTRACT LAW | 1

 © Anglofon Studio, 2023

Author:
András Petz

www.anglofon.hu

1053 Budapest, Kecskeméti u. 13.

+36 1 266 7605
+36 20 955 2527
 CONTENT

INTRO
WELCOME TO OUR READERS!....................................................................................................4
About this e-book ......................................................................................................................4
How to use the e-book?............................................................................................................. 5

SALES
Contracts involving sale transactions..........................................................................................6
Terms related to sale transactions...............................................................................................7
Sample sales contract.................................................................................................................8
Key provisions of a sales contract................................................................................................9

SERVICES
Contracts for services................................................................................................................10
Terms related to services...........................................................................................................11
Sample contract for services.....................................................................................................12
Key provisions of a contract for services....................................................................................13

EMPLOYMENT
Employment-related documents..............................................................................................14
Terms related to employment..................................................................................................15
Sample employment agreement............................................................................................16
Key provisions of an employment agrement...........................................................................17

OUTRO
How to learn more?..................................................................................................................18
 INTRO

WELCOME TO OUR READERS!

Thank you for downloading our e-book. We are glad that you are interested
in studying Legal English. Our main goal is to ensure that legal practitioners,
law students and anyone wishing to immerse themselves in the specifics of
Legal English can attain Legal English knowledge at a sufficiently high level
to enable them to work in English and to draft high quality legal documents.

ABOUT THIS E-BOOK

This e-book gives you a short preview of our Legal English materials. We
chose the three most common subjects that lawyers have to work with. These
are sale and purchase, services and employment.

Theory
Each subject starts with an introduction to the contract types. This is a diffi-
cult topics as the definition of contract types is different in the civil and the
common law.

Key terms
The instructions on the contract type is followed by a discussion of the termi-
nology with a focus on the key terms. This is probably the most crucial aspect
of learning Legal English, as some of them may cause misunderstanding as
the meaning of a term in English is not exactly what you expect based on the
knowledge of civil law, while others have a well-known everyday meaning,
but, at the same time, also have a specific meaning in legal context. As the
civil law system is fundamentally different from the common law, legal con-
cepts in civil law do not always have an equivalent term in the common law.
We call your attention to these terms.

Excerpt from contracts

The e-book presents the practical usage of the defined terms in their original
context in a short excerpt of a contract, highlighting the usage of the verbs
in combination with nouns, as well as the phrases typically used in English
language contracts.
Please note that the excerpts in our materials are only for educational pur-
poses. They are not suitable for use in a transaction, as they do not contain
all the necessary elements that need to be regulated between the parties.

Key provisions of a contract

The last part of each subject is the presentation of the key provisions of the
contract, explained with a special focus on their purpose, including the pos-
sible rules applicable to the subject. The sample provision on the left and the
explanation on the right give you a clear understanding of the meaning and
the application of the contract provision in practice.

4 | CONTRACTS
 INTRO

HOW TO USE THE E-BOOK?

This e-book is published in the form of interactive pdf file for your convenience of use.

You can practice pronunci-
ation by highlighting a text,
setting the language by
choosing British, American
or International English.
Use the highlight function
by selecting a text and set-
ting the colour for a great-
er variation of highlights to
guide your eye to impor-
tant parts.
You can add remarks to
the text. This way you can
personalize this e-book by
adding comments, making
notes for future reference.

CONTRAST

Learners of legal English

often find it difficult to
distinguish between simi-
lar terms. This problem is
addressed by providing
to-the-point explanation
for such differences.

MULTIPLE MEANINGS

Several legal terms have

two or more different
meanings in various
contexts. Your attention is
called to the meanings of
such terms in an easy to
understand format.

KEY TERMS

Even among legal terms,

the key terms deserve
special attention. You will
find them at the bottom
corner of ech page for
your convenlence.

CONTRACTS | 5
 SALES | THEORY

CONTRACTS INVOLVING SALE TRANSACTIONS

One of the most frequently used contracts are those regulating the transac-
tions involving property, especially real property. Property ownership is cru-
cial for most people. Purchasing real property requires great care for many
reasons. First, the number of real properties is finite, but the profits reaped
from other personal properties, such as various goods, products or mon-
ey, result in property increase. On the other hand, since the number of real
property is finite, there cannot be real increases.

Sales contract
A contract describing the conditions of the transfer of title of ownership to
a property, real or personal. The transaction can take place in various forms.
Obviously, real property is the most important property that persons may
have during their lives, therefore, most attention is paid to real property sales
contracts. It is also referred to as sale and purchase agreement. Real prop-
erty sales contracts and some other contracts affecting property or property
related rights must be made in writing. In other words, they are said to be
within the Statute of Frauds.

Contract for sale

Contract for sale is a general term, which includes all contracts under which
a piece of property is passed from one person to another. It includes the
sales contract, which we discussed above, and the contract to sell, in other
words a supply contract, which is typically used in commercial transaction
for the sale of goods and products, typically at a future date and often at
regular intervals.

Supply contract
An agreement for the production of certain goods or products to be sold by
the supplier to the buyer at a future date or dates. It can best be described
as a contract of sale combined with the production of the goods or products
in question. A supply contract, by definition, does not include the shipping
of the product to the destination, though it typically provides for the trans-
portation of the products to a certain point, subject to the conditions agreed
between the supplier and the buyer. The supply contract is also called a
contract for a future sale.

Escrow contract
The escrow contract regulates the payment of funds into escrow with an es-
crow agent, if escrow is involved in a sale transaction. If a property is encum-
bered, the buyer can pay the purchase price into escrow with an escrow
agent, who will hold the funds in escrow, pay off any encumbrances, and
apply the funds as instructed by the seller.

Lease contract
A lease contract is concluded between the lessor and lessee or, if the proper-
ty in question is real property, between landlord and tenant. In a real proper-
ty lease, the landlord gives the property in question to the temporary use of
the tenant, who, in exchange, pays a fee called rent. The subject of lease can
also be any other property, even labour. There are several types of leases,
some of which are applied for technical purposes instead of a sales contract.

6 | CONTRACTS
 TERMINOLOGY | SALES

TERMS RELATED TO SALE TRANSACTIONS

A classic legal term which means land and any-

Real estate thing built on it which cannot be removed with- CONTRAST
out causing damage to the property.

The act of moving materials, goods or products Transportation

Transportation from one location to another typically in com-
mercial transactions.
Periodic payment made by a tenant of a prop-
Rent erty to the owner in exchange for possession
and use of the property.
A financial gain obtained by operating or pro-
Profit ducing something, especially the difference
between the investment and the earning.
A general term for changing
location of persons, products
or materials in commercial
transactions.
Shipping
The actual delivery of the goods
from the manufacturer or trader
to the end user.

A legal term for the fullest control one may

Title have over a property item, also known as title
of ownership to the property.
! MULTIPLE MEANINGS
A legal instrument whereby one (typically an
Escrow attorney) holds money or document of a third
party until a condition has been fulfilled. Profit
• The difference between income
An amount of money that is used for a special and expenses in financial terms,
Funds purpose. Often used in contracts as a reference practically meaning the money
for a certain sum of money equivalent to cash. that a business makes.

An umbrella word covering everything that • In relation to a property,

Goods may be subject to a sale transaction typically in anything that is produced by it,
commercial transactions, excluding real estate. including fruits, rent or any other
benefit.
A legal concept which regulates that certain
Statute of Frauds types of contracts (typically those related to
real estate) must be in writing to be valid.

A legal term for the attention paid when doing

Care something correctly and with consideration to
avoid damage or risk. KEY TERM

The most general term for all claims, liens, Property

Encumbrance charges or liability attached to real property to
evidence an obligation.
The physical moving of goods from one point
Shipping to another, typically the moving of goods from
the warehouse to the customer.
A legal term for anything
capable of being owned.
In everyday terms it means
“thing”, typically any physical
item or intangible property.

CONTRACTS | 7
 SALES | SAMPLE CONTRACT

EXCERPT FROM A SALES CONTRACT

1. Subject
The Parties hereto enter into this Sales Contract (hereinafter referred to as the Contract)
with the purpose of transferring title of ownership to the Property specified below.

2. Description of the Property

The Property is registered at Topographical No. xxx, physically located in Budapest, at [Ad-
dress], with a net floor space of 100 square meters, comprising three rooms, and classified
in the land register as apartment.

3. Purchase price
The Parties agree that the purchase price of the Property is six hundred thousand euros
(EUR 600,000), to be paid in two portions specified below.

4. Payment schedule
Upon the execution of this Contract, the Buyer shall pay to the Seller one hundred thou-
sand euros (EUR 100,000) in cash as earnest money. By signing this Contract, the Seller
acknowledges receipt of the amount of earnest money in full. The Parties represent that
they are fully informed of the legal effect of earnest money. The Buyer shall pay the bal-
ance of the purchase price, five hundred thousand euros (EUR 500,000) within thirty (30)
days of signing this Contract by bank transfer to the bank account of the Seller.

5. Earnest money
The Parties acknowledge that if the Contract has been duly performed, the amount of the
earnest money will be included in the purchase price. If this Contract is not performed
for reasons that are not attributable to either of the Parties, or that are attributable to
both Parties, the earnest money is to be repaid to the Buyer. In the event the Buyer is
responsible for the failure of the closing of the transaction, the Seller will retain and the
Buyer will forfeit the earnest money. If the Seller is responsible therefor, the Seller shall
repay double the earnest money received from the Buyer.

6. Representations and warranties

The Seller represents to be the exclusive owner of the Property. The Seller unconditionally
warrants that the Property is free of liens, claims and encumbrances, and also represents
that no third party has any right to the Property that may render the Buyer's acquisition of
title and use of the Property impossible.

7. Registration of title
Upon the payment of the purchase price in full, the Seller irrevocably and unconditionally
consents to the registration of the Buyer’s title of ownership to the Property in the Land
Register as purchase, parallel to deleting its title of ownership.

8. Delivery
The Seller shall deliver the Property to the Buyer when the balance of the purchase price
has been paid. The Parties shall record the delivery in writing. All personal property shall be
removed from the Property. The Property shall be clean and fit for habitation.

8 | CONTRACTS
 TERMINOLOGY | SALES

KEY PROVISIONS OF A SALES CONTRACT

A legal term explaining why the parties enter

Subject into the contract, usually written at the begin-
ning of the contract. As to its nature, the subject
of the contract can be sales, services or works.
Once the basic category has been clarified, it
sets forth the details of the transaction.
The legal description of the property contain-
Property ing all relevant details as required by legal rules
description set forth with exactitude in the contract and all
related documents.
The price to be paid for acquiring the title of
Purchase price ownership to a property item, typically written
first in letters, then, in parenthesis, in numbers
for absolute precision in English language con-
tracts.
CONTRAST
Subject
It points at the property or
services which is to be sold or
provided under the contract,
without setting exact bound-
aries.
Scope
It is a delimitation of the sub-
ject, setting forth specifically
what is included and what is
not, for the avoidance of doubt.

The timing of the payment of the purchase

Payment schedule price. Depending on the agreement of the par-
ties, the payment may be made in one lump CONTRAST
sum or in a number of portions to be agreed
upon accurately.
Earnest money
A portion of the purchase price, with certain A sum paid up front to bind the
Earnest money legal consequences in the event of non-per- parties with specific rules as to
formance by either party, the most common how it should be applied if the
being the forfeiture thereof in case of non-per- sales transaction falls through.
formance by the buyer and the repayment of
double the amount in case of non-performance Deposit
by the seller. An amount used to secure
a transaction, paid by the
The process of recording a real property in the depositor to the depository
Registration of Title relevant registry in order to evidence the legal and returned when no longer
title of the owner against any third party bring- needed.
ing any claim against the owner.

Turning over the possession of property, ei-

Delivery ther physically or symbolically. In general, the
property may either be real property, such as a
building, or personal property, such as goods,
money or a document.
The stipulation which determines which language
Prevailing language document will be considered the one that reflects
the intention of the parties to a contract drafted in
two or more languages. Typically used when the
native language of the parties are different.
KEY TERM
Title
An abbreviated term which refers
to title of ownership, meaning
full control of a property bestow-
ing right of disposition to the
property.

CONTRACTS | 9
 SERVICES | THEORY

CONTRACTS FOR SERVICES

A contract for work regulates the process of performing various types of
work. Work can be performed in legal relationships, including employment
contracts, contracts for services, works contracts or even agency contracts.

Works contracts
In a works contract, the contractor agrees to build, repair, assemble or cre-
ate a product required by the client. The most typical works are construc-
tion works, whereby the contractor is required to erect a building or other
structure, such as a tunnel, a bridge or a plant. The process of construction
is typically regulated in detail, anticipating problems that often arise in the
progress of the performance of the works, and avoiding subsequent dispute
by addressing most situations that the parties may anticipate.

Duty of result and care

From legal point of view, the main duty of a contractor is to bring about a
result, that is to perform works or any other activity which is manifested in
a product at the end. The works contract is also called a contracting agree-
ment. The contract is not considered to have been performed until and un-
less the obligations set out therein have been completed. The contractor will
only be discharged from the obligations after the works have been complet-
ed and delivered to the client. This duty in the civil law is called duty of result
or duty of performance. It is contrasted with the requirement to exercise due
care in performing obligations without necessarily having to create of prod-
uct at the end.

Contracts for services

Contracts for services regulate the provision of various types of services.
Such services can range from consulting in various fields, providing any pro-
fessional services, ranging from accounting, educational and medical servic-
es to catering or other similar services. Legal relationship occurring on the
basis of contract for services should not be confused with employment and
agency. Legally speaking, a contract for services may regulate both obliga-
tions of result and those requiring the exercise of care, depending on the
type of the obligation in the subject contract.

Agency contracts
An agency contract is made between the principal and the agent, under
which the latter agrees to represent the principal in particular matters. As an
example, representation may include the attorney's activity in a legal pro-
ceeding. The agent’s duty is restricted to acting with all the agent’s mental
and physical abilities directed towards to the interest of the principal. This is
a good example for the duty of care, as the agent is not required to produce
a result by his/her involvement in the activities set out in the contract.

10 | CONTRACTS
 TERMINOLOGY | SERVICES

TERMS RELATED TO SERVICES

A legal term for acting on behalf of another CONTRAST

Agency person. Traditionally, it is the relationship be-
tween the principal and agent.
Obligation of conduct
The process of creating something, such as One is required to act in a
Construction erecting a building or any other structure. certain way in performing
obligations without necessarily
Something constructed, such as a building or a having to create of product.
Structure bridge. Structures include the foundation and
superstructure or something (such as a house, Obligation of result
tunnel, bridge, etc.) that is built by putting parts One is discharged from the
together and that usually stands on its own. obligations only is the results
set out in the contract has
Is something (such as a building or large piece been performed.
Facility of equipment) that is built for a specific pur-
pose (e.g. medical facility).

A structure with a roof and walls, typically used

Building for living (a house) or performing industrial or
commercial activity (factory or office).
CONTRAST
Demanding money from another person on
Claim account of a wrong, action or omission of the
other party. Work
Any activity that one may be
The process of building, repairing or assem- engaged in under a contract,
Works bling a building or any other structure. which may be performed in
any legal arrangement.
Commonly used legal term for disagreement
Dispute between two or more persons regarding the Works
subject matter. It means nothing more than The process of building, repair-
controversy but sounds more serious. ing or assembling a building or
any other structure.
A very general term meaning that one acts in
Services support of another person or entity typically on
a regular basis.

The concept that one is required to act in a cer-

Obligation of tain way in performing obligations without nec-
conduct essarily having to create a product at the end.
KEY TERM
The concept that one is discharged from the
Obligation of result obligations only if the results set out in the con- Services
tract has been performed. A very general term meaning that
one acts in support of another
The degree of care that a reasonable person is person or entity typically on a
Due care expected to exercise in conducting one’s affairs regular basis.
so as not to cause harm or injury to others.

CONTRACTS | 11
 SERVICES | SAMPLE CONTRACT

EXCERPT FROM A CONTRACT FOR SERVICES

1. Scope of services
The Client hereby engages the Service provider to provide the services specified in this
Contract. The Service provider hereby agrees to perform the obligations set out herein sub-
ject to terms and conditions hereinafter set forth (hereinafter referred to as "Services").

2. Requirements for services

The Service provider shall render the Services as a reasonable and prudent person, acting
in conformity with the requirements determined by the Client and with utmost care and
diligence. The Service provider shall, at all times, act in advancement of the interest of the
Client.

3. Term
This Agreement shall take effect on January 1, 2023 and continue in effect for an indefinite
period of time until terminated in accordance with the provisions hereof.

4. Payment for services

In consideration for performance of the Services set forth herein, the Client shall pay to the
Service provider the sum of four thousand euros (EUR 4,000). The Client shall pay the above
specified sums by bank transfer within eight (8) days to the bank account of the Service
provider kept at X Bank (Bank account number: …………. ).

5. Liability
The Service provider shall compensate the Client for all damages caused intentionally or
grossly negligently by the Service provider.

6. Confidentiality
The Parties will hold confidential all information obtained concerning the other Party in con-
nection with carrying out this Agreement and will release such information to third parties
only to the extent necessary for the performance of the Services hereunder, and only upon
prior notice to and with the consent of the other Party. The confidentiality obligation shall
survive the termination of the Contract.

7. Cooperation
The Parties agree to perform their respective duties hereunder with due care at all time. The
Client and the Service provider shall mutually cooperate in the performance of their respec-
tive duties hereunder in accordance with the requirements of good faith and fair dealing.
The Client undertakes to make available all the necessary information to the Service pro-
vider. The Service provider may request further information from the Client whenever such
additional information is required.

8. Notices
The Parties agree to mutually inform each other of any and all events or circumstances af-
fecting the performance of the obligations hereunder.

9. Termination
Either Party may terminate this Agreement at any time without specifying the reason thereof
upon thirty (30) days written notice to the other Party. If either Party breaches a material obli-
gation arising herefrom and fails to cure the breach within eight (8) days from the receipt of
a written notice of the other Party thereof, the injured Party may terminate the Contract with
immediate effect by giving a written notice of termination.

12 | CONTRACTS
 TERMINOLOGY | SERVICES
KEY PROVISIONS OF A CONTRACT FOR SERVICES
The exact definition of the services to be pro-
Scope of services vided under a contract for services, specifying
what is included in the services and what is not.
The contract provisions setting forth the stand-
Requirements ards under which services are to be provided,
for services including the degree of care and diligence.
The time period during which the contract is in
Term existence and in effect between the parties.
The compensation to be paid for the services
Payment for to be provided under the contract. It may be
services a single payment or payment made at regular
intervals, or it may even be linked to the suc-
cessful performance of an obligation.
The provision of a contract which sets for the
Liability consequences of causing any damages to the
other party with a view to avoiding any contro-
versy in case such damage occur.
A requirement that someone may not disclose
Confidentiality certain information to anyone else, except as it
is required by the contract or the relevant legal
rules.
A contract provision which requires the parties
Cooperation to work together in all or in certain aspects of
their activities, as one party's actions may be
dependent upon that of the other party. Good
faith and due care are typical requirements re-
lated to such cooperation.
The legal term used for regulating the process
Notices of giving information by one contracting party
to another regarding the matters of the con-
tract.
A general term for ending a contractual rela-
Termination tionship, typically used for putting an end to
the transaction or discontinue the cooperation
between the parties.
CONTRAST
Term
In singular, it means the period
while the contract is in effect.
Terms
In plural, it typically refers to
the conditions of the contract.
Terms and conditions are often
used in combination, moreover,
General Terms and Conditions
means the document regulat-
ing the relationship between
the parties.
! MULTIPLE MEANINGS
Term
• An expression typically used in
a specific sector, such as a legal
term of art.
• Reference to the duration of a
contract, with special regard to
indefinite or definite nature.
• The conditions of the contract
between the parties.
KEY TERM
Conditions
A legal word meaning all that
one party needs to fulfil for the
successful performance.
CONTRACTS | 13
 EMPLOYMENT | THEORY

EMPLOYMENT-RELATED DOCUMENTS
Work can be performed in different legal arrangements, under a contract for work, an
agency contract or in employment. The purpose of these contracts are basically the
same. One party hires another to exert efforts to the first party’s benefit. Most people
are hired as employees to work in a manner that is regulated by the rules of employ-
ment, which grants regular income for the worker and generally increased protection
against insecurities, while the employer is assured of the services of the employee on
a permanent basis.

Employment contract
The employment contract regulates the relationship between the employer and the
employee. Employment is a special type of service performed under circumstances
regulated by the law, namely the employment law of the relevant jurisdiction. Employ-
ment is generally established by the submission of a job application by an applicant.
The employer, or the relevant organizational unit at the employer company, reviews
the applications received for a job advertisement and selects the most promising can-
didates. After the employee has accepted the conditions of employment, the parties
sign the employment contract.

Essential elements
There are certain elements that must be included in the employment contract, such as
the compensation, the job, the place of work and the term of employment, as well as
other important elements depending on the relevant jurisdiction. Certain matters not
regulated by the employment contract may be set out in a separate document.

When the parties enter into an employment agreement, the employer is required to
inform the employee in writing of the working hours, other components of his/her
compensation package, the salary payment date, the date of commencement of the
employment, the duration of paid leave and the process of determining such dates,
the rules governing the periods of notice concerning the employer and the employee
in case the employment is terminated, and whether a collective bargaining agreement
applies to the employee.

Job description
The job description is a document, usually attached to an employment contract, which
describes the specifications of a job, along with some other important issues. The job
description generally includes the job title and the qualifications required for the job,
the designation of the person to whom the employee reports, as well as any other
expectation towards the employee in the course of the performance of duties arising
from the employment. The job description also sets forth the duties and responsibili-
ties of the employee in detail.

Collective bargaining agreement

This refers to a contract concluded between the management of a business association
and an organization representing the employees, which is usually a trade union of the
workers or a workers' council. The collective bargaining agreement defines the most
important conditions of employment, including employees' salary, working hours,
probationary period, and payments for any extra work, vacations and various types
of benefits. Typically, only one collective agreement may be in effect at one company.
Managers working at the company as not subject to the provisions of the collective
bargaining agreement.

14 | CONTRACTS
 TERMINOLOGY | EMPLOYMENT

TERMS RELATED TO EMPLOYMENT

A person who has submitted his or her infor-

Candidate mation to an agency in the hopes of attaining a CONTRAST
position that is best suited to him or her.

A brief description of the position of the em- Employment

Job title ployee, with a view to his/her place in the or- The relationship between the
ganization as well as in the hierarchy. employer and the employee,
regulated by the employment
Working outside normal work hours. Employ- agreement.
Overtime work ees are generally required to work a number of
hours each day for the agreed salary and, un- Labour
less otherwise agreed, will be paid some extra A relationship between the
money for working beyond these hours. employer and organization
representing the employees,
In employment context, it is the state when a typically the trade union,
Qualification person has acquired the necessary education, governed by the rules of labour
proven by a college or university degree after law.
having passed an examination after the com-
pletion of a university, college or course.

An association of workers of a company, where

Workers’ council no trade union operates, organized to promote
the interest of the workers by acting as an inter- ! MULTIPLE MEANINGS
est representation bodies.

A general term used also in employment for all Title

Compensation what an employee receives in compensation
for the work performed, including the salary,
the benefits and the bonus.
Specific tasks, duties and responsibilities of
Job an employee performed as daily routine as re-
quired by the employer.
A place where en employee works, as designed
Workplace in the employment contract and instructed by
the employer.
• Quick reference to a piece of
writing or a function, such as the
job in this case.
• An abbreviated term used in con-
nection with sale transactions,
meaning the title of ownership
to a piece of property.

Something provided by the employer to an

Benefits employee in addition to the salary in the frame
of the compensation package.
KEY TERM
A letter or form sent by a job applicant contain-
Job application ing details of one's qualifications, abilities, skills Work
and experience. A very general term for the
activity involving mental or
physical effort exerted in order
to achieve a result.

CONTRACTS | 15
EMPLOYMENT | SAMPLE CONTRACT

EXCERPT FROM A EMPLOYMENT AGREEMENT

This Employment Agreement is made and entered into by and between A (hereinafter:
"Employer"), and B (hereinafter: "Employee") with the following terms and conditions:

1. Position
The purpose of this agreement is to determine the terms of employment at the Company.
The Employee shall be employed in management position. The direct superior of the em-
ployee shall be the Managing Director of the Company.

2. Place of work
The Employee shall perform its duties in different locations. The place of performing du-
ties shall be the principal office of the Employer as may be designated from time to time.

3. Term of Employment
This agreement shall commence on [Commencement date] and remain in effect for indefi-
nite period of time in compliance with the currently effective laws.

4. Salary
The monthly gross base salary of the Employee shall be 4,000 EUR payable on the first
working day of each month. The salary shall be reviewed annually in compliance with the
wages policy of the Employer. Any increase in the salary shall be subject to Employee’s
performance. The Employee shall be entitled to bonus In addition to the monthly salary, the
rules of which shall be regulated by the currently effective Bonus Policy.

5. Fringe benefits
The Employer shall provide fringe benefits to the Employee, including a cafeteria plan.

6. Bonus
The Employee is eligible for bonus for his contribution to the profitability of the business. The
amount of the bonus shall be determined at the sole discretion of the Employer.

7. Conflict of Interest
During the term of the employment, the Employee undertakes not to participate or acquire
a stake, either directly or indirectly, in any business which is a competitor or supplier of Em-
ployer, with the exception of shares in publicly traded companies.

8. Non-competition
During the term hereof, the Employee agrees not to provide any services in any form of co-
operation to any person or entity whose business activity is similar to that of the Employer.

9. Termination of employment
This agreement may be terminated without cause by either party upon thirty days' written
notice. The thirty day notice period shall be extended by five (5) days after three years of
employment at the Employer. Upon the termination of the employment, Employer shall
pay severance pay amounting to six months’ salary. The Employer may terminate the em-
ployment for cause if the Employee wilfully violates its obligation arising from the employ-
ment, with special regard to the provisions for confidentiality and/or competition.

10. Return of Documents

Upon the termination of the employment, the Employee shall return, at the request of the
Employer, any and all documents including confidential information.

16 | CONTRACTS
 TERMINOLOGY | EMPLOYMENT

KEY PROVISIONS OF AN EMPLOYMENT AGREEMENT

The place of the employee in the organization

Position and the hierarchy of the employer company CONTRAST
with regard to the employee’s function.

The place where the job is to be performed by Salary

Place of work the employee under an employment contract,
not excluding any other location if the job to be
performed so requires.
In this context, it defines whether the employ-
Term of ment contract is made for definite or indefinite
employment period of time.
The sum of money and monies worth that
Salary someone is paid typically on a monthly basis
for the performance of work under an employ-
ment contract with the Employer.
The amount paid to the employ-
ee every month in compensation
for the work performed by the
person employed.
Bonus
Money paid on the top of
the salary and benefits for
extraordinary performance
of the employee or any other
person .

A collective term for all what the employees

Fringe benefits are provided by the employer as part of their
compensation package. It may include various
items, depending on the situation. It is often ! MULTIPLE MEANINGS
granted in the form of a cafeteria system.

An amount given to employees for outstanding Compensation

Bonus performance. It some jurisdictions, it can be ei-
ther discretionary or performance-based.
Any situation when employees in a position
Conflict of Interest may obtain personal benefits from actions
made in their official capacity. The employee is
required to act for the sole benefit of the em-
ployer but not themselves or any third party.
A contract provision wherein an employee
Non-competition promises not to enter into an agreement in
competition with the employer during the term
of the employment and/or thereafter.
• Money paid for the services of
an employee, including salary,
benefits and also bonus.
• In tort law, it encompasses all
legal redress in monetary form
which serves the function of
making good for any damage
caused.

The provision concerning the ways of ending

Termination the employment. Employment may be termi-
of employment nated with or without cause, with immediate KEY TERM
effect or upon notice.
Employee
The provision of an employment contract that The person employed by the
Return of requires the employee to return document be- employer under an employ-
documents longing to the employer after the termination ment contract.
of the employment.

CONTRACTS | 17
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