.

E-Book Series 1

Andrs Petz

Contracts and parties

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

Theory | Intro

Contracts and Parties

Contracts involving property transactions
One of the most frequently used contracts is that regulating the transactions involving property, especially real property. Property ownership is crucial for most
people. Purchasing real property requires great care for many reasons. First, the
number of real properties is finite. While the profits reaped from other properties,
such as various goods, products or money, result in property increase. On the other hand, since the number of real property is finite, there cannot be real increases.
Contracts for sale
Contracts for sale regulate the passing of the title of ownership from the seller to
the buyer. A contract for sale may be a present sale, under which the goods or
products or a real property change hands for the price agreed in the contract, or
can be a supply contract, which is a contract for sale under which the products to
be sold first have to be produced and then, once available, can be sold.
Sales Contract
The sales contract describes the conditions of the transfer of title of ownership
to a property, real or personal. The transaction can take place in various forms. It
can be restricted to the sale of goods and services, which very often are not even
regulated in writing. Real property sales contracts are required by the law to be
in writing.
Supply Contract
Supply contract is an agreement for the production of certain goods or products
to be sold to by the supplier to the buyer at a future date. It can best be described
as a contract of sale combined with the production of the goods or products in
question. The supply contact is considered a contract for a future sale.
Escrow Contract
An escrow contract regulates the payment of funds into escrow with an escrow
agent, if escrow is involved in a sale transaction. If a property is encumbered, the
buyer can pay the purchase price into escrow, 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 property in
question is real property, between landlord and tenant. The Landlord gives the
property in question to the temporary use of the Tenant, who, in exchange, pays
a fee called rent.

Contracts for work and services

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

The civil law tradition | 3

Intro | Theory

Works Contracts
In a works contract, which is also called a contracting agreement, the contractor
agrees to build, repair, assemble or create a product required by the client. The
main duty of a contractor is to bring about a result, that is to perform works, prepare designs, do research or any other activity which is manifested in a product
at the end.
Contracts for services
Contracts for services regulate the provision of various types of services. Such
services can range from representing someone or acting on behalf of another, or
providing some work to the other.
Agency Contracts
An agency contract is made between the principal and the agent. Under an agency contract which the agent agrees to represent the principal in any matters. Representation may include the attorney's activity in a legal proceeding, as well as
other matters, such as medical, accounting, commercial and educational matters.
The agents duty is restricted to acting with all the agent mental and physical
abilities directed towards to the interest of the principal.

Employment-related documents
All employment related contracts regulate various aspects of employment or labour issues. Labour law is a rule-laden field of law, which is controlled by the
Labour Code of the relevant jurisdiction, but the relationship between the parties
are regulated by further documents. See the most important ones below.
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. Employment 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 candidates.
Collective bargaining agreement
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, payments for any extra work, vacations and various types of benefits.

4 | The civil law tradition

Theory | Intro

Job description
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, duties and responsibilities of the employee,
as well as the designation of the person to whom the employee reports.

Documents related to lending transactions

The provision of a loan requires a precisely documented process, which culminates in making the loan agreement between the creditor and the debtor. However, the complexity of such transactions requires additional documents, creating
a secondary obligations aiming at securing the primary one, also referred to as
collateral.
Loan Agreement
Loan contracts regulate lending transactions, whereby the lender lends money to
the borrower with the conditions specified in the contract. The loan is definitonally considered a one-time transaction, where the money is usually provided in one
lump sum. Howerer, the term "loan" is also used in a broader sense, referring to
any contract under which a lender grants a so called loan facility or credit line to
the borrower.
Credit Agreement
The contract between the creditor and the debtor is often called a credit agreement. However, bankers often simply refer to the credit agreement as a loan
agreement. There is a difference between the technicalities of the process, but, in
practice, they are used interchangeably. A credit line is also referred to as a loan
facility agreement.
Mortgage Contract
A mortgage is an agreement which is used for encumbering the real property as a
security for the repayment of a loan. The owner of the property is the mortgagor,
who has borrowed a loan from the creditor, typically a bank, referred to as the
mortgagee, which is the lender. In order to secure the fulfilment of the payment
obligation of the borrower, a mortgage is created on the real property. In case of
a payment default, the mortgagee may acquire the title to the property which has
been used to secure the loan.
Security Agreement
A document that grants a secured party a security interest in a specified property that is pledged as collateral. In case of a security agreement, the property
in question is usually not real property but some other personal property, usually products or equipment used in commercial transactions. In the event that the
borrower defaults, the pledged collateral can be seized and sold. The process is
covered by the law of secured transactions.

The civil law tradition | 5

Intro | Theory

Parties to Contracts

This is a short description of the parties to the contracts dealt with in the
previous pages.

Buyer & seller

TENANT &
LANDLORD

AGENT &
Principal
EMPLOYER &
Employee

CREDITOR &
Debtor

Lender &
Borrower
Mortgagor &
Mortgagee

Lessor & Lessee

Contractor&
Client

The buyer acquires title of ownership to a certain property item under a sales contract from
the seller, who transfers the title of the same under a contract of sale.
Parties to a real property lease, whereby the
tenant has possession of and pays rent for the
use of a real propery owned by the landlord.
The agent is appointed to act on behalf of the
principal as his or her representative. The agent
is required to advance the interest of the principal.
Employer hires people and pays their wages,
thereby providing a living to an employee, who
performs the work on a regular basis for a compensation called salary in the form of employment.
They are parties to a credit, provided by the
creditor to the debtor. The debtor ows a financial obligation to the creditor.
They are related through a loan, where the
lender lends money to the borrower, and the
borrower who owes money to the lender
They are parties to a mortgage agreement
under which mortgagor has granted right to
mortgagee to foreclose the real property if the
loan is not repaid.
They are connected through a lease, where the
lessor lets out property to another in exchange
for money, and the lessee uses a property
owned by lessor against a fee.
They are related to each other through the performance of some works ordered by the client
and performed by the contractor.

6 | The civil law tradition

Terminology | Intro
EXERCISE I.
Choose the most appropriate term

8. The escrow conditions are laid down by the

__________ contract

1. The seller and the buyer agree on the details of a

sale transaction in a ________ contract.

a. escrowment
b. escrowing
c. escrows
d. escrow

a. selling
b. sale
c. sales
d. sell
2.The principal comissions the agent in the ________
contract.
a. agency
b. agent
c. agent's
d. agencies
3. The details of the lease is regulated by the
_________ contract.
a. tenant
b. leasing
c. lease
d. lessee's
4. Money is lent by the bank under the __________
contract.
a. lending
b. loaning
c. lender
d. loan
5. The conditions of a credit line is usually set out by
the __________ agreement.
a. credit
b. crediting
c. credits
d. creditors'
6. The conditions of employment is regulated by
the __________ agreement
a. employee's
b. employment
c. employer's
d. employ
7. The client and the contractor regulate their affairs
in the __________ agreement.
a. contracting
b. contracts
c. contractors'
d. contractings

9. The company is established by the registration of

the __________ of association.
a. article
b. articles
c. arts
d. articles'
10. The __________ contracts regulates the foreclosure process in case a loan is not repaid.
a. mortgagee
b. mortgagor
c. mortgages
d. mortgage

EXERCISE II.
Determine which contract the following entities
are parties to. Choose only one which fits best.
1. Principal & Agent
a. Agency
b. Entrustment
c. Mandate
d. Assignment
2. Seller & Buyer
a. Supply
b. Deposit
c. Sales
d. Agency
3. Mortgagor & Mortgagee
a. Escrow
b. Supply
c. Sales
d. Mortgage
4. Employer & Employee
a. Lease
b. Employment
c. Collective bargaining
d. Agency

The civil law tradition | 7

Intro | Terminology
5. Lessor & Lessee
a. Tenancy
b. Lease
c. Rent
d. Agency
6. Contractor & Client
a. Contracting
b. Agency
c. Supply
d. Work
7. Creditor & Debtor
a. Mortgage
b. Credit
c. Lease
d. Assignment
8. Supplier & Buyer
a. Sales
b. Purchase
c. Supply
d. Lease
9. Landlord & Tenant
a. Lease
b. Sales
c. Supply
d. Agency
10. Borrower & Lender
a. Loan
b. Agency
c. Employment
d. Services

EXERCISE III.
Which are the counterparties of the following parties? Please note that a party may be used in different contexts.
1. Seller
a. Buyer
b. Vendor
c. Client
d. Principal
2. Employee
a. Customer
b. Employer

8 | The civil law tradition

c. Company
d. Mortgagor
3. Lender
a. Supplier
b. Policy holder
c. Borrower
d. Guarantor
4. Buyer
a. Agent
b. Contractor
c. Seller
d. Principal
5. Mortgagor
a. Mortgagee
b. Escrow agent
c. Supplier
d. Borrower
6. Debtor
a. Agent
b. Principal
c. Borrower
d. Creditor
7. Bidder
a. Escrow agent
b. Mortgagor
c. Tenderer
d. Contracting Body
8. Landlord
a. Agent
b. Mortgagor
c. Tenant
d. Client
9. Lessor
a. Seller
b. Lessee
c. Landlord
d. Supplier
10. Borrower
a. Lender
b. Mortgagor
c. Principal
d. Client

Terminology | Intro
11. Tenant
a. Principal
b. Agent
c. Lessee
d. Landlord
12. Agent
a. Seller
b. Principal
c. Contractor
d. Employer
13. Lessee
a. Beneficiary
b. Tenant
c. Lessor
d. Purchaser
14. Vendor
a. Seller
b. Employer
c. Agent
d. Purchaser
15. Depositor
a. Lender
b. Depository
c. Borrower
d. Agent
16.urchaser
a. Employee
b. Vendor
c. Agent
d. Insurer
17.Employer
a. Employee
b. Vendor
c. Creditor
d. Agent
18. Supplier
a. Seller
b. Vendor
c. Employee
d. Buyer
19. Client
a. Buyer
b. Contractor
c. Agent

d. Employer
20. Client
a. Buyer
b. Contractor
c. Agent
d. Employer

EXERCISE IV.
Match the parties according to the contractual relationship between them. If you match them correctly, you will find two parties to the same contract in each line.
1. Property related contracts
a. landlord
b. lessor
c. buyer
d. vendor

seller
purchaser
tenant
lessee

2. Contract for work

a. client
b. agent
c. customer
d. employer

principal
service provider
contractor
employee

3. Works Contract
a. main contractor
b. client
c. tenderee
d. contracting entitiy

tenderer
bidder
contractor
sub-contractor

4. Agreements for banking and insurance

a. creditor
b. lender
c. insurance company
d. mortgagee

insured
borrower
mortgagor
debtor

EXERCISE V.
What do the following definitions stand for?
1. A type of contracting agreement to prepare the
design for the construction of a building or other
structure
____________________
2. A contract between organizers of a journey and
passengers intending to participate in an organ-

The civil law tradition | 9

Intro | Terminology
3. A contract for the provisions of money by a creditor to the borrower
____________________

4. sales contract - contract for sale

a. True
b. False

4. A contract made between the principal and the

agent, under which the latter agrees to represent
the principal in any proceeding
____________________

5. loan agreement - lease agreement

a. True
b. False

5. An agreement for the production of certain

goods or products to be sold to by the supplier to
the buyer at a future date
____________________
6. A contract between an employer and an employee that specifies the rights and obligations of each
party to the agreement
____________________
7. A contract aimed at the performance of research
activity following the order and the instruction of
the client
____________________
8. A contract under a debtor grants a mortgage to
the creditor
____________________
9. A contract for the construction of a building or
any structure
____________________
10. A legal document under which the seller's title of ownership to a property item is vested in the
buyer
_____________________
EXERCISE VI.
Is it true that the following contracts are the same?
1. contracting agreement - works contract
a. True
b. False
2. lease agreement - tenancy agreement
a. True
b. False
3. agency contract - mandate
a. True
b. False

10 | The civil law tradition

6. sales contract - supply agreement

a. True
b. False
7. sales contract - sale and purchase agreement
a. True
b. False
8. employment agreement- agency agreement
a. True
b. False
9. loan facility- credit line
a. True
b. False
10. escrow contract- deposit agreement
a. True
b. False

EXERCISE VII.
Choose the synonym of the following document
names
1. Sales contract
a. Puchase order
b. Contract for sale
c. Supply contract
d. Contract to sell
2. Agency contract
a. Employment contract
b. Contract for services
c. Loan agreement
d. Sales contract
3. Lease agreement
a. Escrow contract
b. Rental agreement
c. Loan agreement
d. Mortgage contract

Terminology | Intro

5. Works contract
a. Employment contract
b. Lease agreement
c. Contracting agreement
d. Labour contract

3. Contractor
a. Employer
b. Mortgagor
c. Attorney
d. Client

6. Abstract of Title
a. Title page
b. Agency contract
c. Folio of Title
d. Credit agreement

4. Supplier
a. Buyer
b. Mortgage holder
c. Purchaser
d. Insurance company

7. Loan facilty agreement

a. Lease contract
b. Credit line agreement
c. Leasing agreement
d. Mortgage agreement

5. Employer
a. Employee
b. Creditor
c. Contractor
d. Landlord

8. Contract to sell
a. Selling agreement
b. Purchase contract
c. Supply contract
d. Sale and purchase agreement

6. Purchaser
a. Supplier
b. Client
c. Vendor
d. Tenant

9. Contract for services

a. Sales contract
b. Contracting agreement
c. Mortgage agreement
d. Employment agreement

7. Borrower
a. Policy holder
b. Lender
c. Subcontractor
d. Creditor

10. Tenancy agreement

a. Employment agreement
b. Lease agreement
c. Escrow agreement
d. Loan agreement

8. Bidder
a. Tenderer
b. Contracting Authority
c. Client
d. Insurer

EXERCISE VIII.
Choose the counterparties of the following party.
You have two choices.

9. Buyer
a. Mortgagor
b. Creditor
c. Supplier
d. Seller

1. Mortgagor
a. Mortgagee
b. Agent
c. Client
d. Mortgage holder

10. Insurance company

a. Insured
b. Contractor
c. Policy holder
d. Lender

2. Client
a. Attorney
b. Buyer

The civil law tradition | 11

Intro | Terminology
KEY TO EXERCISES

We hope you have found our e-book useful

and managed to acquire some basic information regarding the different contract types and
the parties thereto.

If you are too busy to attend the classroom

training and would prefer a more flexible solution, our E-LEARNING COURSE might just be
perfect for you.

EXCERCISE I.
1 c, 2 a,3 c, 4 d, 5 a, 6 b, 7 a, 8 d, 9 b, 10 d
EXCERCISE II.
1 a, 2 c, 3 d, 4 b, 5 b, 6 a, 7 b, 8 c, 9 a, 10 a
EXCERCISE III.
1 a, 2 b, 3 c, 4 c, 5 a, 6 d, 7 d, 8 c, 9 b, 10 a

EXCERCISE IV.
1. Property related contracts
a. Landlord - tenant
b. Lessor lessee
c. Buyer seller
d. Vendor purchaser
2.
a.
b.
c.
d.

Contracts for work

Client contractor
Agent principal
Customer service provider
Employer employee

3.
a.
b.
c.
d.

Works contract
main-contractor sub-contractor
client contractor
tenderee tenderer
contracting entity bidder

4.
1.
2.
3.
4.

Agreement for banking and insurance

creditor debtor
lender borrower
insurance company insured
mortgagee mortgagor

EXCERCISE V. - Definitions
1 Design contract
3 Loan contract
5 Supply contract
7 Research contract
9 Construction contract

2 Travel contract
4 Agency contract
6 Employment contract
8 Mortgage contract
10 Sales contract

EXCERCISE VI. True or false

1 True, 2 True, 3 False, 4 True, 5 False, 6 False, 7 True, 8 False, 9
True, 10 False
EXCERCISE VII. Synonyms
1 b, 2 b, 3 b, 4 d, 5 c, 6 c, 7 b, 8 c, 9 b, 10 b
EXCERCISE VIII. Counterparties
1 a, c; 2 a, c; 3 a, d; 4 a, c; 5 a, c; 6 a, c; 7 b, d; 8 b, c; 9 c, d; 10
a, c

12 | The civil law tradition

To help you on your way of becoming an

expert of legal terminology, we also have a
special offer for you: you can purchase our
study book on the Terminology of Civil Law
designed to help you during your studies
with 20% off if you order it within 7 days from
downloading our e-book. Click HERE to place
your order now!