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THE STRUCTURE OF A COMMERCIAL CONTRACT (1) - THE HEADING/TITLE (B1+/B2)

You will remember that in the Introduction to this series [1] we looked at the following introductory parts of a commercial contract:


"INTERNATIONAL DISTRIBUTION AGREEMENT


THIS AGREEMENT IS ENTERED INTO ON THIS 18th DAY OF FEBRUARY 2021

BETWEEN


HAPPY SKIN Inc (hereinafter referred to as “HSI”), a Company registered in the State of California, having its office at 9876 Slick Boulevard, San Jose, California


AND


THE DISTRIBUTOR CAMDIS Limited, (hereinafter referred to as “CAMDIS”) whose registered office is at 12 Mountain Road, Cambridge, England, and whose registered number is 49820912. "


We can see that the first part of this extract states ‘INTERNATIONAL DISTRIBUTION AGREEMENT’. This is called ‘the heading’ or ‘the title’ of the contract.


Every contract should have a heading. The heading should be IN CAPITAL LETTERS. The heading should also provide a clear and concise description of the nature or purpose of the contract. In other words, what kind of agreement is it? There are, of course, different kinds of commercial agreements.


The heading should be meaningful and strike a concise and reasonable balance in describing the agreement. For example, it should say more than just ‘CONTRACT’ or ‘AGREEMENT’. However, it should not give too much detail (for example, ‘INTERNATIONAL AGREEMENT BETWEEN HAPPY SKIN AND CAMDIS FOR THE DISTRIBUTION OF CAMDIS SKIN CARE PRODUCTS BY HAPPY SKIN IN JAPAN 2021’. In fact, the names of the parties to the contract should not be used in the heading.

Many headings define the relationship between the parties as an ‘Agreement’, rather than a ‘Contract’. However, they mean the same thing – in other words, a binding legal relationship created by a contract between two parties.



[1] https://www.cambridgelegalenglish.com/post/the-structure-of-a-commercial-contract-introduction-b1--b2



EXERCISE

Look at the following extracts from contract clauses. Can you match the contract clause (1) –(5) with the appropriate contract heading (a) – (e) [The Answer Key is below the exercise]


Contract Clauses

(1) At our request, you agree to provide a signed certification that you are using all Software pursuant to the terms of this Agreement, including the Scope of Use.

(2) The salary referred to in paragraph 9 shall be reviewed on an annual basis.

(3) Time shall be of the essence for the delivery of the Goods and if any delivery is not made as specified in clause 15 of this Agreement, the Seller shall be in breach of this Agreement.

(4) Should any sums due in accordance with this Agreement be unpaid, or delayed, interest will accrue on them daily at the rate of 4% per annum until such sums are repaid either prior to or following any judgment of a court.

(5) It is agreed and understood that the lessee will not assign, sublet, charge, part with possession of, or share the occupation of, the whole or any part of the Premises.


Headings

(a) EMPLOYMENT AGREEMENT

(b) LOAN AGREEMENT

(c) TENANCY AGREEMENT

(d) SALE OF GOODS AGREEMENT

(e) SOFTWARE LICENCE AGREEMENT







ANSWER KEY

(1) - (e)

(2) - (a)

(3) - (d)

(4) - (b)

(5) - (c)


© Cambridge Legal English Academy 2021



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