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CONTRACTS Powered By Docstoc
  A contract is an agreement between two or more parties to do, not do, or
   promise something. Contracts can come in many forms — they can be oral or
   written, implied or express, and legally enforceable or not. The strongest
   contract, in terms of enforceability, has an offer, acceptance, consideration for
   the exchange, clearly sets out the terms of the agreement without ambiguity,
   and is signed by the involved parties with proper capacity to enter into the
   contract. Weaker contracts include verbal agreements or contracts drawn up
   by parties in direct violation of state or federal laws. There are numerous
   aspects related to valid contracts; in fact, an entire course in law school is
   often devoted to contract law.
  While we tend to think of written contracts when we talk about contracts, the
   most common type of contract is actually an oral contract. In fact, we pretty
   much enter into at least one oral contract every day. For example, a parent
   might tell his or her child that they will get a reward if they behave properly
   at a certain event. If the child agrees, then you have a type of oral contract —
   albeit one that isn't legally binding!
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  Contracts can be implied or expressed. That is, the entire contract, or one or
   more of its terms, can be implied or express. Typically, when we think of
   contracts we think of express contracts. For example, in a contract for a
   monetary loan, you will likely promise to pay a certain monthly rate at a
   certain interest rate until the loan is paid off. In addition, you probably will
   agree to late payment fees as well. These terms are explicitly laid out in an
   express, written contract.
  Sometimes, however, a contract term or the entire contract itself is implied.
   For example, when you order food at a restaurant you are entering into a
   implied, oral contract. You and the server do not explicitly state the offer
   and acceptance for the steak you ordered with a list price of 10 Dollars
   (FJD) but that agreement is implied. The basic elements of a contract,
   namely an offer, acceptance of the offer, and consideration for the exchange,
   are all implied.

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 Offer and acceptance, sometimes also called ―meeting of the minds‖ is a
   fundamental part to a contract. Without it, we might bind parties to contracts
   who did not want or intend to be party to the contract. Consideration, on the
   other hand, ensures that something is being exchanged. In some cases, the law
   requires that consideration be adequate, that is, a relatively reasonable price,
   or nominal, where just a dollar will do. Other times, the requirement of
   consideration may be waived in the interest of preventing injustice.

 Contracts may be enforceable by law or they may not. The example of the
   agreement between the parent and child would not be enforceable by law
   whereas the agreement for a loan likely would be enforceable by law.
   Whether a contract is enforceable by law depends on numerous factors, the
   primary factor being whether the parties to contract intended the contract to
   be legally binding or legally enforceable

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  A contract may not be legally enforceable for a variety of factors. Problems
   on the face of the contract can make it void. If one of the parties to the
   contract has diminished capacity whether it be due to age or mental
   condition the contract will most likely be unenforceable. Fraud or
   misrepresentation by a party to a contract can void the contract as can
   contract terms that violate controlling laws.
  A legally enforceable contract is an exchange of promises with specific
   legal remedies for breach. These can include compensatory remedy,
   whereby the defaulting party is required to pay monies that would otherwise
   have been exchanged were the contract honored, or an Equitable remedy
   such as Specific Performance, in which the person who entered into the
   contract is required to carry out the specific action they have reneged upon

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Different Types Of Contract
  With certain specific exceptions, contracts do not have to be in writing to be
     legally binding.
    However, signed written contracts are usually the most desirable form of
     contract, especially when it comes to business arrangements. After all:
    the contents ('terms') are in writing for all to see;
    they can ensure that precise language is used in describing the terms of the
    there is, therefore, less opportunity for misunderstandings and conflicting
    there is less need to rely on memories of what was originally agreed; and
    the individuals involved in the transaction may change over time.
    Verbal agreements may be difficult to prove, difficult to remember precisely,
     and open to misunderstanding. In resolving a dispute on this issue, the
     conduct and statements made by each party leading up to the contract under
     challenge will be the critical issue.

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  Verbal agreements may be difficult to prove, difficult to remember precisely,
     and open to misunderstanding. In resolving a dispute on this issue, the
     conduct and statements made by each party leading up to the contract under
     challenge will be the critical issue.
    Contracts can be a mixture of written and verbal agreements when the
     written agreement does not contain many terms.
    If a written contract does not appear to be complete, verbal undertakings
     and conduct will be considered.
    It is a rule of law that when a contract has been put in writing, and it appears
     to be complete, it will be accepted against a contradictory verbal agreement.
    In business arrangements, it is usually preferable to have a full written
     contract in order to avoid all the pitfalls of:
    proving a contract existed
    proving it to be a complete or incomplete document
    proving verbal undertakings
    interpreting people’s conduct.
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                Written Contracts
  If the contract has been formally written and signed by the parties, there is
   an assumption that all the terms of the agreement are contained in the
   written document regardless of what may have been verbally agreed.
  Contracts can be a combination of written and verbal agreements when the
   written agreement itself covers very few terms.
  When a contract is signed, it is assumed that all the terms have been read
   and agreed to.
  If unsigned, a written contract must:
     be presented to and understood by all parties to be valid; and
     be recognized by all parties as a contract, that is, it must look like a
       contract and not simply a receipt or docket.

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                 Verbal Contracts
  Verbal agreements rely on the good faith of all the parties and can be
   difficult to prove.
  Conversely, in some situations, insisting on a detailed written agreement
   may be counter-productive if:
     the value of the transaction is not particularly high; and/or
     the presentation of a substantial document, possibly with many
       provisions, may raise more questions and uncertainty in the minds of the
       parties than it resolves, ending in the transaction not proceeding. If you
       are confident of the good faith of the party, a less intimidating form of
       written arrangement may be the best course of action.
  Do not automatically think that because it is not in writing, it can never be
   proved. Verbal agreements can be supported by:
     the conduct of the other party both before and after the agreement
     specific actions of the other party
     past dealings with the other party
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              Business Contracts
     Express Contracts
   In this type of contract, the parties to the contract state the terms and
   conditions either by word of mouth or in writing, at the time of forming the
   contract. A definite written or oral proposal of the contract is accepted by
   an offeree in a way that explicitly defines legal consent to the terms of the
  Implied Contracts
   Contracts implied in fact and contracts implied in law are both a part of
   implied contracts. But a real implied contract consists of certain obligations
   that arise from a mutual agreement and intention of promise, which is not
   expressed verbally. An implied contract cannot be labelled as implied in
   law because such a contract lacks the requirements of a true contract. The
   term "Quasi Contract", is however, a more specific identification of
   contracts implied in law. Implied contracts depend on the reason behind
   their existence. Thus, for an implied contract to develop, there must be
   some transaction, act or conduct of a party in order for them to be legally
   bound. A contract will not be implied if there are any chances of harm or
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 If there is no clarity of communication, implication and understanding between
      the two parties, the court will not conclude any contractual relationship between
      the two parties. If the parties continue to follow their contractual terms, even
      after the contract has ceased to exist, an assumption arises that the two parties
      have mutually agreed to a new contract that has same provisions as the old
      contract and a new implied contract is formed.
      Executed Contracts
      An executed contract is termed as an agreement in which no other transaction is
      left out to be executed by either party. This definition could be incorrect to a
      certain extent, since completion of work will mean that the contract has ended.
      But in case of executed contracts, there exists some act/transaction or an
      obligation that has to be performed at some point of time in the future according
      to the contractual terms.
      Aleatory Contracts
      A mutual agreement which comes into effect only in case of an occurrence of an
      uncertain event or a natural calamity, is termed as an aleatory contract. In this
      type of contracts, both the parties may assume risks. For example, a fire
      insurance policy or a travel insurance is a type of aleatory contract as the policy
      holder will not receive any benefits of the contract unless in an event of fire
      occurrence or a plane crash (in case of travel insurance).
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  Bilateral and Unilateral Contracts
     If two entities exchange a mutual and reciprocal promise that implicates the
     execution of an act, an obligation or a transaction or forbearance from
     execution of an act or an obligation, with respect to every party involved in
     the contract, is termed as bilateral contract in the language of law. It is also
     called a two-sided contract because of the two-way promises made by
     parties involved in the contract.

     A unilateral contract is a promise made by only one party. The offerer
     promises to execute a certain act or an obligation if the offeree agrees on
     performing a requested act that is understood as a legally enforceable
     contract. It just requires an acceptance from the other party to get the
     contract executed. Thus, this is a one-sided contract since only the offerer is
     bound to the court of law. One important point of this type of contract is
     that, the offeree cannot be sued for refraining, abandoning or even failing to
     execute his act, since he does not promise anything.

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  Unconscionable Contracts
   Unconscionable contracts are those that are unfair and unduly one-way
   favors of the party who stand at a superior end of the bargaining power. The
   word 'unconscionable' means an insult to justice and decency. No mentally
   healthy and honest person would ever accept an unconscionable contract
   and enter into it. Unconscionability of the contract is determined by
   analyzing the situations and circumstances of the parties involved in the
   contract, when the contract was made. This doctrine is applied only in cases,
   in which it would be unjust or an affront to the integrity of the law system to
   enforce a contract like that. The court of law have found that
   unconscionable contracts are a result of exploitation of illiterate and
   impoverished consumers.
  Void and Voidable Contracts
   A void contract implies that the involved parties are not liable to any legal
   obligations or rights, meaning that the parties are not legally bound with
   reference to that contract. In fact, a void contract means a contract has
   ceased to exist and that there is no contract existing between the two parties.

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 A voidable contract, on the other hand, is an agreement between any two or
  more parties, that has a legal binding. A voidable contract can be treated as
  never been legally bound on a party that has been a victim of fraudulent
  execution or if that party was suffering from any legal disability. Also, a
  contract is not void unless and until any of the involved parties, choose to
  treat it as a void contract by confronting its implementation.
 Adhesion Contracts
  Adhesion contracts are the ones that are drafted by a party who has a larger
  advantage in bargaining. This means that the party who has a bargaining
  advantage leaves the other party with no other option than to either accept
  the contract or to reject it. Commonly known as "take-it or leave-it"
  contracts, they are often considered because for most of the businesses, it is
  difficult to negotiate and bargain all the terms and conditions of every
  contract. It is not necessary that all adhesion contracts are unconscionable
  contracts, since in some cases it is quite coincident for one party to have a
  superior bargaining advantage leaving no option for the other party.

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                  Offerer & Offeree
  Offerer - a person or entity who makes a specific proposal to another (the
     offeree) to enter into a contract. The person who usually offers the contract
     to the other party or person .

  Offeree - a person or entity to whom an offer to enter into a contract is
   made by another (the offeror). The party who usually accepts the offer from
   the offerer.
  Consideration - is the concept of legal value in connection with contracts.It
   is anything of value promised to another when making a contract. It can
   take the form of money, physical objects, services, promised actions,
   abstinence from a future action and much more. Under the notion of "pre-
   existing duties," if either the promisor or the promisee already had a legal
   obligation to render such payment, it cannot be seen as consideration in the
   legal sense.

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                           A Contract be an offer from one
      How Is enforceable contract there mustFormed
     In order to create an
   person (the offeror) asking another person (the offeree) to do or not do
   something. There needs to be an acceptance of this offer by the other person
   (the offeree). And lastly, there needs to be payment of some kind
   (consideration) for the benefit that is gained from the contract.
   Consideration is different from a gift or donation as these two types of
   payments do not ask for a benefit in return, for example if you decide to
   give $100 to an animal charity then you are not entering into a contract with
   the charity, they cannot ask anything of you and you cannot ask anything in
   return from them. Also, consideration does not have to be money. It can
   consist of products or the performance of a service.
  When an offer has been made, no contract is formed until the offeree
   accepts the offer. When you make an offer, never assume that the offeree
   will accept the offer. Contractual liability is based on consent.
  When you are an offeree, do not assume that an offer will remain open
   indefinitely. In general, an offeror is free to revoke the offer at any time
   before acceptance by the offeree. Once the offeror terminates the offer, the
   offeree no longer has the legal power to accept the offer and form a contract.
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  When you are the offeree, do not start contract performance before notifying
     the offeror of your acceptance. Prior to your acceptance, there is no
     contract. An offer can be accepted by starting performance if the offer itself
     invites such acceptance, but this type of offer is rare.
    Until an offer is accepted, the offeror is free - unless it has promised to hold
     the offer open - to revoke the offer.
    If you need time to make up your mind before accepting an offer, get the
     offeror to give you a written promise to hold the offer open for a few days.
     That will give you time to decide whether to accept.
    Don't reject an offer and then try to accept it. Once an offeree rejects an
     offer, the offer dies and the offeree's legal power to accept the offer and
     form a contract terminates.
    Except for the simplest deals, it generally takes more than one round of
     negotiations to form a contract. Often, the offeree responds to the initial
     offer with a counter-offer. A counter-offer is an offer made by an offeree on
     the same subject matter as the original offer, but proposing a different
     bargain than the original offer. A counter-offer, like an outright rejection,
     terminates the offeree's legal power of acceptance.
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                      Counter Offer
  A counter-offer is when a person would like to accept an offer but on
   different terms than those set out in the original offer. Again, there has to be
   an acceptance of the counter-offer for there to be a contract. For example,
   company A offers to buy pens (the offer) from company B at a price of $1
   for each pen. Company B says they want $2 for each pen (counter-offer).
   For there to be an enforceable contract, company A has to accept the new
   price of $2 for each pen.
  Is a new offer made in response to an offer received from an offeror. A
   counteroffer has the effect of rejecting the original offer, which cannot
   thereafter be accepted unless revived by the offeror’s repeating it.

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        Escape Obligations of A
                              Contract to be invalid. These
     There are other factors which may cause a contract
   factors have to do with whether a person has actually consented to the
   agreement or can be said to be under duress. For example misrepresentation
   is when one party gives information to induce the other party to enter into
   the contract and the information turns out to be false, for example if you are
   told that a painting is an original piece of work by a famous artist and it is
   actual a copy of the original, then you can return the painting and ask for
   you money back.
  Duress is where a party is coerced into entering the contract as a result of
   immediate fear of injury to himself, other persons, or to his property. An
   example is if you sign a contract to sell your house because a person is
   threatening to harm your children if you do not.

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  Escape from contract: A party may in some cases escape obligations
     established by a contract for one of the following reasons:
    Mutual or unilateral mistake as to a basic assumption upon which the
     contract was made
    Misrepresentation of facts inducing one of the parties to enter the contract
    Duress inducing one of the parties to enter the contract
    Lack of capacity ,Capacity when used with the mathematics meaning, is
     also called volume . Capacity is a legal term that refers to the ability of
     persons to enter into contracts. Some categories of people have had their
     freedom to enter into contracts restricted. These cat to contract (such as
     infancy, influence of drugs, alcohol or mental illness)
    Absence of a writing evidencing formation of the contract
    Impossibility or unwillingness to perform the contract (" repudiation ")
    .

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  Misleading or deceptive conduct by one of the parties (the Tort of deceit),
  Frustration of purpose of the contract without default In law, a default is the
   failure to do something required by law or to appear at a required time in
   legal proceedings. For example, when a party has failed to file meaningful
   response to pleadings within the time allowed, with the result that only one
   side of either party

7/13/2011             CONTRACTS                                                      21
  Meaning and effect of contract terms: Many contract disputes involve a
     disagreement between the parties about what terms in the contract require
     each party to do or refrain from doing. Hence, many rules of contract law
     pertain to interpretation of terms of a contract that are vague or ambiguous.

  Remedy for breach of contract: If one party breaches (i.e. fails to
     perform) his or her obligations under a contract, the party injured by the
     breach typically may recover money damages as compensation for the
     breach. In addition, if the breach of contract is "material," the injured party
     may be excused from performing any of its remaining obligations under the
     contract. In a relatively small number of cases, an injured party may either
     obtain a court order requiring that the breaching party perform his or her
     obligations under the contract ("an order of specific performance") or
     refrain from further breach ("an injunction").

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  Breach of contract occurs when one party to the contract acts in
     contradiction to what the parties have expressly agreed in the contract. A
     contract can be breached in many different ways, for example, by not
     paying the whole price stated in the contract. When this occurs, the party
     who suffers some loss due to the breach will normally terminate the contract
     and ask a court for compensation. For example, one party may breach a
     contract by not timely delivering the goods or services that have been
     agreed. If the other party who was to receive the goods or services suffers a
     loss due to the delay, he can go to a court and claim different types of
     remedies in order to receive compensation for the loss. Compensation can
     be in the form of money but may also be in the form of actions or
     prohibitions. The following are examples of remedies which may be sought
     from a court.

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Dissolution Of A Contract
  A dissoluble contract is a valid contract, not a nugatory or suspended
   contract. It is also to be noticed that dissoluble contracts are those which are
   of mutual commitment that is binding on both parties. It is worthy of
   mention here as well that the dissolution of contracts can be achieved by
   agreement or for reasons to be decided by law, like abrogation by individual
   will or breaking. The contract can also be dissolved by enqeda '(expiration)
   or ebtal (annulment) or enhelal (dissolution).
  Expiration occur when the contract has been executed in full and its
   obligations performed. When this has been done and the aim achieved, the
   contract is considered expired. Dissolution occurs before the expiry time of
   a contract or before execution of it. Dissolution means the cessation of a
   valid contract, and it can be backdated. Annulment occurs to an originally
   invalid contract, and it leads to backdated annulment of the contract and all
   its effects from the beginning in all cases.

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  To sum up: for dissolution to be effective several conditions must exist:
 1)  the contract must be of mutual commitment, that is binding for both
 2) one of the parties fail his commitment,
 3) the other party must have the ability to fulfill his commitment and to bring
     things back to their contractual state after the dissolution, and
 4) The party demanding dissolution should warn the other party of his
     intentions first.
  It should be noted that the first condition (of the contract being binding to
   both parties) in a general prerequisite in all contracts open to dissolution. If
   there is no neglect of duty on the one of the parties the other party cannot
   demand dissolution. This other party can demand either execution or
   dissolution of the contract. It is within his right also to demand
   compensation in either case.

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  If failure to fulfill the commitment was due to some external circumstance
   outside the control of the party, the contract is automatically dissolved; and
   in this case it turns to einfisakh (Annulment) by the power of the law. But if
   the failure was due to the debtor's own action or inaction, then the creditor
   can demand dissolution of the contract and demand compensation on the
   basis of contractual responsibility.
  The third condition makes it clear that the creditor who can demand
   dissolution and/or compensation is one who has ready fulfilled his
   commitment, not one who has also failed.
  Agreement on dissolution of contract: It is possible to reach agreement
   that the contract is considered solved automatically once its commitments
   are not fulfilled without the need to resort to law. However, this agreement
   does not exempt the need for prior warning, unless the two parties agree
   explicitly on this. The judge has to rule on dissolution granting it when its
   conditions are realized.

7/13/2011             CONTRACTS                                                     26
  The two parties may agree that the contract should be considered dissolved
     when in obligations are not met; in this case, the judge has to grant
     dissolution. However, he has to make sure that the condition of prior
     warning has been met, unless the two parties agreed that there was no need
     for prior warning. In this case, the contract is considered dissolved once the
     time has come for execution and the commitment has not been fulfilled. The
     judge's ruling new would be new confirmation, and not exposition, of

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            Advantages of contract
  Contracting can be extremely rewarding from a financial perspective,
     although there are some further advantages and disadvantages which this
     article addresses.
    Advantages
    More Money – contractors typically earn more than their counterparts in
     permanent employment.
    Flexibility – more control over where and when you work
    Holidays – clients are tolerant on contractors taking more holidays, simply
     because they don’t pay you when you take time off. See Taking Holidays
     and Time off.
    Less office politics – contractors don’t need to network their way to higher
     positions and get involved in long term politics.
    Training – full control over self training. If you want to go on a training
     course you can. There is complete control over your professional destiny.

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  Disadvantages
  Frequent applications – moving on frequently and having to re-establish
     yourself at another organization can be frustrating.
    Downtime - during market slumps contractors can often find themselves out
     of work. [Keeping your skills updated and having a good process for finding
     a contract can eliminate these downtimes.]
    Skills – Keeping skills constantly updated can be time consuming and
     require considerable effort outside of normal office hours.
    Administration – can sometimes be a little cumbersome when starting,
     although is low hassle after a couple of months.
    Holiday pay and sick pay – Contractors don’t get paid when they take time
     off for holidays or due to sickness. The risk of long term illness can be
     covered by Contractor Protection Cover.
    Security – there are few protections available to you, and clients can
     terminate you at very short notice. In reality, this rarely happens unless you
     oversell yourself into a client site.

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  The great majority of contracts governing the transportation of goods by
   ships are made either by bills of lading or charter parties. The term charter
   party is a corruption of the Latin carta partita, or "divided charter." It is
   used to describe three types of contracts dealing with the use of ships owned
   or controlled by others. Under a demise charter, the ship-owner gives
   possession of the vessel to the charterer, who engages the ship's master and
   crew, arranges for repairs and supplies, takes on the cargo, and acts much
   like the owner during the term of the charter.
  A more common arrangement is the time charter. In this arrangement, the
   ship-owner employs the master and crew, and the charterer only acquires the
   right, within contractual limits, to direct the movements of the ship and
   decide what cargoes are to be transported during the charter period. Under
   both demise and time charters, the charterer pays "charter hire" for the use
   of the ship at a specified daily or monthly rate.

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  The third type is the voyage charter, which is a contract of affreightment, or
   carriage. Essentially, a voyage charter is a contract to rent all or part of the
   cargo space of a merchant vessel on one voyage or a series of voyages.
   When a charterer contracts for only a portion of the cargo space, the
   governing contract is called a space charter. Under a voyage charter, it is
   customary for the master or her agent to issue a bill of lading to the shipper,
   who is usually the charterer. However, the voyage charter remains the
   governing contract.
  A bill of lading is an ACKNOWLEDGMENT, by the master or owner,
   that serves as confirmation of the receipt of the goods specified to be taken
   aboard the vessel. Each charterer is entitled to receive a bill of lading from
   the ship-owner or anagent of the owner. In ordinary transactions, a bill of
   lading, signed by the master, is binding upon the owner of a vessel. It can
   circumvent disputes that might otherwise arise over whether goods were
   ever received and their condition when placed upon the vessel.

7/13/2011             CONTRACTS                                                       31
  We depend upon the law to give us a stable nation and
   economy, a fair society, a safe place to live and work.
   …But while law is a vital tool for crafting the society
   we want, there are no easy answers about how to
     create it. ...Legal rules control us,
     yet we create them

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                 THE END

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