Agreement is a crucial aspect of any business or legal transaction. An agreement is a mutual understanding between two or more parties, where each party agrees to do or not do something in exchange for something else. An agreement can be oral or written and can take several forms. In this article, we will explain the types of contracts and their definitions.
1. Express Contract
An express contract is a contract where the parties explicitly agree on the terms and conditions of the agreement. The terms of the contract can be either written or spoken. In an express contract, all the parties involved are aware of the terms, conditions, and obligations from the outset.
2. Implied Contract
An implied contract is a contract where the parties don`t explicitly state the terms and conditions. Instead, the agreement arises from the conduct of the parties involved. In an implied contract, the parties involved have a mutual understanding of the terms of the agreement, which can be inferred from their actions.
3. Unilateral Contract
A unilateral contract is a contract where one party makes an offer, and the other party accepts the offer by performing a specific action. In a unilateral contract, the offeror is bound to the contract as soon as the offeree performs the action. A classic example of a unilateral contract is a reward-based system, where a person offers a reward for the recovery of a lost item.
4. Bilateral Contract
A bilateral contract is a contract where both parties make promises to each other. In this type of contract, both parties are bound to the contract as soon as they exchange promises. A classic example of a bilateral contract is a purchase agreement, where a buyer promises to pay for an item, and the seller promises to deliver the item.
5. Executed Contract
An executed contract is a contract that has been fully performed by both parties involved. In an executed contract, all the terms and conditions of the agreement have been met, and both parties have fulfilled their obligations.
6. Executory Contract
An executory contract is a contract where one or both parties still have to perform their duties. In an executory contract, the terms and conditions of the agreement have been agreed upon, but one or both parties are yet to fulfill their obligations according to the agreement.
In conclusion, understanding the different types of contracts is essential for any business or legal transaction. Whether it is an express, implied, unilateral, bilateral, executed, or executory contract, each agreement has its unique characteristics and requirements. It is essential to seek legal advice for any contractual agreement to ensure that the terms and conditions meet the expectations of all parties involved.