Types of Contract

11 Key excerpts on "Types of Contract"

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  eBook - ePub

  Business Law

  A Straightforward Guide

  • (Author)
  • 2014(Publication Date)
  • Straightforward Publishing Digital

    (Publisher)

  Ch. 1

  BUSINESS LAW-THE LAW OF CONTRACT

  Underpinning all contracts are four main principles:

  1) A contract is an agreement between the parties to that contract-one person makes an offer and the other accepts that offer 2) Both parties have an intention to be legally bound by the agreement-this is usually known as an intention to create legal relations

  3) Parties to the agreement need to be absolutely clear as to the terms of the agreement – this is the main area of contention with contracts, as we will see laterc4) There must be consideration provided by each of the parties to the contract – this means that one person promises to give or deliver and the other promises to pay. The offer and the payment – either monetary or in kind - is the consideration. When making a contract, or entering into a contract all parties to the contract must have the legal capacity to enter into a contract. Very importantly, a contract, in most cases, does not have to be in writing – a piece of paper is not necessary, the agreement and evidence of that agreement forms the basis of contract. There are a few important exceptions, including contracts relating to interests in land (Law of property (Miscellaneous Provisions) Act 1989, s 2(1)) and consumer credit (Consumer Credit Act 1974).

  Other factors affecting formation include: •   Form-the way the contract is created (e.g. the sale of land can only be made in the form of a deed) Form is an issue with specialty contracts but not with simple contracts

  •   Privity of contract and the rights of third parties-generally a contract is only enforceable by or against a party to it, subject to exceptions and certain third party rights are now protected in the Contracts (Rights of Third Parties) Act 1999.

  The nature of contracts – unilateral and bilateral contracts

  The majority of contracts entered into are known as Bilateral contracts. This quite simply means that each party to a contract agrees to take on an obligation. This obligation is underpinned by a promise to give something to the other party. A Unilateral contract will arise where one party to the contract will make a promise to do something (usually to pay a sum of money) if the other party carries out a certain task. Examples of this are where you might undertake to pay someone a sum of money if they shave off their hair for charity or give up smoking. Estate agents enter into unilateral contracts whereby a percentage of sales go to the agent if they sell the property. However, the agent is not legally bound to sell the property, just to try to sell it.

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  Foundations of Economic Analysis of Law

  • Steven Shavell(Author)
  • 2009(Publication Date)
  • Belknap Press

    (Publisher)

  PART III CONTRACT LAW In this part, I examine contracts—agreements between parties about certain of their future actions—and the law governing enforcement of these agree-ments. Chapter 13 presents an overview of the entire subject of contracts and provides the background for the remainder of the material. Chapter 14 is concerned with contract formation, that is, with the process through which parties find contracting partners, with aspects of contract negotia-tion, and with the rules governing when an arrangement between parties becomes legally recognized as a contract. Chapter 15 considers at length an important type of contract: the contract to produce something. Chapter 16 is concerned with two other Types of Contract: the contract for transfer of possession of something that already exists (such as land or a painting), and donative contracts. 13 OVERVIEW OF CONTRACTS This chapter presents an overview of contracts; it is concerned with the definition of contracts, the basic justifications for their existence, and im-portant aspects of contractual practice and of the law of contracts. Subse-quent chapters will deal in greater detail with certain aspects of contract law and with particular Types of Contracts. 1 1. DEFINITIONS AND FRAMEWORK OF ANALYSIS 1.1 Basic definitions. By a contract I mean a specification of the actions that named parties are supposed to take at various times, generally as a function of the conditions that hold. The actions typically pertain to delivery of goods, performance of services, and payments of money, and the conditions include uncertain contingencies, past actions of parties, and messages sent by them. For example, a contract might state that a photogra-pher should take pictures at a wedding on February 1, that the buyer should pay the photographer $1,000 within a week of the wedding, that the buyer 1. For general introductions to economic analysis of contract law, see, for example, Posner 1998, chap. 4, and Shavell 1998.

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  Law and the Built Environment

  • Douglas Wood, Paul Chynoweth, Julie Adshead, Jim Mason(Authors)
  • 2021(Publication Date)
  • Wiley-Blackwell

    (Publisher)

  2 The Law of Contract 2.1 General principles The law of contract is frequently the fi rst ‘ case law ’ subject to which students are introduced when they commence their legal studies. The main reason for this is that contracts affect the general public more than most areas of law and arise daily in business and commercial life. The contract is the most important stage in the process when land or buildings are transferred and when building projects are undertaken. The ‘ golden age ’ of the law of contract was in the nineteenth century when its major principles were evolved on free market ideologies. Many of the cases referred to in this chapter date from this ground breaking period. The case illustrations used are not limited to this period, however, and the case law referred to in this chapter ranges from the very old to the very modern. A contract is a legally binding agreement. It is a bargain and each side, or party to the contract, must contribute something to it for it to be valid. Not every agreement is a contract nor is it intended to be so. The legally binding element must be present before a valid contract can emerge. In other words the parties must be able to demonstrate their intention to adhere to the agreement made. The protection afforded by entering into a contract is that if it is broken by one party to it, the other party must be able to take the contract-breaker to court if desired. A distinction is made between the situation where the parties exchange mutual promises, known as a bilateral contract, and a unilateral contract where one party promises to do something in return for the other party carrying out some task. When the task is completed the promise made in a unilateral contract becomes enforceable. 2.2 Formalities A contract may be made in any form that the parties wish. This is the case regardless of the sums involved or the complexity of the agreement.

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  Technology Entrepreneurship

  Taking Innovation to the Marketplace

  • Thomas N. Duening, Robert A. Hisrich, Michael A. Lechter(Authors)
  • 2020(Publication Date)
  • Academic Press

    (Publisher)

  Businesses are free to agree, within broad legal limits, upon whatever terms they see fit. Those terms define respective rights and obligations of the parties, and/or rules under which they operate, for the duration of the contract. A contract serves, in effect, as the private law of these businesses. That means that it is extremely important to understand when a contract is created and how it can be enforced. A failure to form a valid contract when intended, or inadvertently committing a business to obligations, can be catastrophic. (Just ask the Winklevoss’.)

  In this chapter, we will consider the basic sources and concepts of contract law, the anatomy of a typical agreement, and introduce various types of agreements often encountered by technology entrepreneurs.

  Sources of Contract Law

  When an issue of contract law arises, it is generally in connection with one of the following questions: Has a contract been formed? If so, what are the terms? And, if there is a breach, is there an applicable defense? If not, what are the remedies?

  Answering these questions, however, is complicated by the fact that a different body of contract law applies depending upon the subject matter of the transaction, the location of the parties to the transaction, and the terms of a written agreement.

  Two primary sources of law govern contracts between parties located within the United States. Historically, the common law of a state (precedential judicial decisions) was applied to contracts formed or performed within its boundaries.1 Consequently, the law varied from state to state. As the frequency of interstate transactions increased, a Uniform Commercial Code (UCC) was developed for, among other things, the sale of goods.2 The UCC, consisting of 10 articles, covers the rights of buyers and sellers in commercial transactions. Drafted in 1952, the UCC has been adopted in its entirety by every state except Louisiana (which has adopted about half of the code). Each state has unique adaptations of the code to fit its own common law findings. Generally, business owners can access a state’s UCC through that state’s Secretary of State Office. The UCC defines goods as all things that are movable at the time of identification to a contract for sale.3

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  Law

  Made Simple

  • D. L. A. Barker, C. F. Padfield(Authors)
  • 2014(Publication Date)
  • Made Simple

    (Publisher)

  7 THE LAW OF CONTRACT In his book Principles of the Law of Contracts, Sir William Anson defined a contract as a legally binding agreement made between two or more parties, by which rights are acquired by one or more to acts or forebearances on the part of the other or others. Shortly it may be defined as an agreement between two or more parties which is intended to have legal consequences. The agreement referred to in the definition means a meeting of minds, called in law consensus ad idem, signifying that the parties are agreed together about the same thing. The definition also emphasizes that the parties to the contract must intend that their agreement shall be legally enforceable. Unless the law regognizes this and enforces the agreements of parties, it would be impossible to carry on commercial or business life. For this reason the law of contract plays a leading role in courses on business studies. These contractual agreements give rise to rights and obligations which the law recognizes and enforces. But certain agreements, such as domestic and social arrangements, are not intended by the parties to be legally binding. The law allows for this. Thus, if Cumming and Gowing agree to meet for dinner and Gowing fails to turn up, the law will do nothing in the matter. The agreement was not intended to create legal rights and duties, and, as such, it is not a contract in law. Every contract is an agreement, but not every agreement is a contract. The object of the law of contract is to identify those agreements which it will enforce and those which it will not. This is of prime importance and will be referred to later in more detail. 1. Essentials of a Valid Contract An agreement will be enforced when the following essential elements exist: (a) Offer and Acceptance. There must be an offer by one party and an acceptance of it by the other. (b) Intention to create legal relations. (c) Capacity of the parties. Each party must have the legal capacity to make the contract.

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  The Law of Contracts and the Uniform Commercial Code

  • Pamela Tepper(Author)
  • 2021(Publication Date)
  • Cengage Learning EMEA

    (Publisher)

  In a bilateral contract, the parties exchange a promise for a promise, whereas in a unilateral contract only one party makes a promise, with the other party required to do some act in return. An express contract is one that is specifically stated. It can be oral or written. An implied contract, however, may be one of two types. There is an implied in fact contract, which is inferred from the facts and circumstances of the transaction, or an implied in law contract, which is court created. Contracts may be executed contracts, which are fully performed contracts, or executory contracts, Copyright 2022 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. 40 PART I AN INTRODUCTION TO CONTRACTS in which a condition or promise has not been performed by one or all of the parties. Another classification dis- tinguishes void, voidable, and enforceable contracts. A void contract has no legal effect and can never become a contract; whereas a voidable contract can be canceled or avoided by one of the parties. An unenforceable con- tract is one that may have all the elements of a contract, but because of a formality or supervening event, such as the passage of a statute, the contract is unenforceable. The final category is formal and informal contracts, which a formal contract requiring the parties to fulfill certain legal formalities. An informal contract, in contrast, has no special legal requirements.

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  eBook - ePub

  Contract Law

  A Straightforward Guide

  • (Author)
  • 2014(Publication Date)
  • Straightforward Publishing Digital

    (Publisher)

  Ch. 2

  Forming a Contract

  In this chapter we look at the main principles underpinning forming a contract. We look at the nature of contracts and the notion of offer and acceptance plus certainty of contract and terms implied into a contract. The intention to create legal relations is examined along with different Types of Contract and capacity to enter into a contract.

  Underpinning all contracts are four main principles: 1) A contract is an agreement between the parties to that contract-one person makes an offer and the other accepts that offer 2) Both parties have an intention to be legally bound by the agreement-this is usually known as an intention to create legal relations 3) Parties to the agreement need to be absolutely clear as to the terms of the agreement – this is the main area of contention with contracts, as we will see later

  4) There must be consideration provided by each of the parties to the contract – this means that one person promises to give or deliver and the other promises to pay. The offer and the payment – either monetary or in kind - is the consideration. When making a contract, or entering into a contract all parties to the contract must have the legal capacity to enter into a contract. Very importantly, a contract, in most cases, does not have to be in writing – a piece of paper is not necessary, the agreement and evidence of that agreement forms the basis of contract. There are a few important exceptions, including contracts relating to interests in land (Law of property (Miscellaneous Provisions) Act 1989, s 2(1)) and consumer credit (Consumer Credit Act 1974). We will outline those contracts that do need to be in writing later on in this chapter. Other factors affecting formation include:

  •  Form-the way the contract is created (e.g. the sale of land can only be made in the form of a deed) Form is an issue with specialty contracts but not with simple contracts

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  Legal Aspects of Public Procurement

  • Michael Flynn, Kirk Buffington, Richard Pennington, Kirk W. Buffington(Authors)
  • 2020(Publication Date)
  • Routledge

    (Publisher)

  A contract is nothing more than an agreement between two or more people to do or not to do something. The key to a contract is that there must be an agreement. A promise, proposal, or offer with no agreement is not a contract. In the public procurement context, a contract is an agreement by a seller or supplier to provide goods or services to the public entity in return for receiving payment from the public entity.

  The common law of contracts is not designed to make the process of conducting business difficult; rather, the purpose of the law of contracts is to facilitate business by establishing fair and efficient rules of contract law. That being said, the law of contracts wants commerce to flow smoothly, so that everyone involved can make a reasonable profit or secure goods and services without one person or supplier having an unfair advantage toward another person or supplier engaged in the market. This constant tension between making sure business is not unduly hampered, yet making sure business people are legally protected, is the dynamic of modern contract law.

  Contracts are primarily governed by state legislation, common law, and the contract itself. Parties to a contract have what is referred to as “the freedom of contract,” which principally allows the parties to establish their own law for the performance of a specific contract. This private contract law may override many of the default rules otherwise established by state law.

  Statutory law may require that some contracts be detailed in writing and executed with particular formalities, such as contracts for the purchase and sale of real estate, guarantees, and contracts of employment in excess of one year. Otherwise, the parties may enter into a binding agreement without signing a formal written document. Contracts related to particular activities or business sectors may be highly regulated by state and federal law.

  When Does a Contract Exist?

  Before taking measures to enforce a contract, it must be established whether or not a contract actually exists. To determine existence, the opinion of the involved parties is ignored, and the “reasonable person rule” serves as the basis for determination. By viewing the dynamic as a whole, the court decides if a “reasonable person” would have reason to believe that the parties intend to be bound to a contract. A binding contract requires an offer, acceptance, and consideration. In addition, the parties must have an agreement as to the material elements necessary for the performance of the contract. This understanding and agreement is known as a “meeting of the minds.”

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  The Entrepreneur's Guide to Law and Strategy

  • Constance E. Bagley, Craig E. Dauchy(Authors)
  • 2017(Publication Date)
  • Cengage Learning EMEA

    (Publisher)

  9.4 CHOICE OF LAW Each individual state has its own governing body of law that is used to determine whether a contract exists and, if so, what the terms are; whether a breach has occurred; and what remedies are available. As discussed below, a written contract will often include a choice-of-law provision , which specifies which state ’ s law will govern the contract. In the absence of such a provision, courts will consider which state has the strongest relationship with the parties and with the substance of the contract, as well as which state has the greatest governmental interest in having its law apply, to determine choice of law. Chapter 2 addressed the application of choice-of-law provisions in noncompete agreements. 9.5 ELEMENTS OF A CONTRACT There are four basic requirements for a contract: (1) there must be an agreement between the parties formed by an offer and accep-tance; (2) the parties ’ promises must be supported by something of value, known as consideration; (3) both parties must have the capacity and authority to enter into a contract; and (4) the con-tract must have a legal purpose. Chapter 9 Contracts and Leases 265 Copyright 2018 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-300 Offer and Acceptance An offer is a statement by the offeror that indicates a willingness to enter into a bargain on the terms stated. In the case of a bilateral contract, acceptance occurs when there is an exchange of promises whereby the person to whom the offer was addressed (the offeree) indicates a willingness to accept the offeror ’ s proposed bargain. For example, assume Brian owns a software consulting company.

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  The Government Manager's Guide to Contract Law

  • Terrence M. O'Connor LLM(Author)
  • 2014(Publication Date)
  • Berrett-Koehler Publishers

    (Publisher)

  Chapter 4

  TYPES OF GOVERNMENT CONTRACTS

  B ecause the government needs so many different things under so many different situations, it needs a wide range of legal instruments to get those things. The generic word for the piece of paper showing some sort of deal between a federal agency and somebody else is agreement.

  Agreements come in all sorts of shapes and sizes. Two common ones are interagency agreements, which describe how one agency will work with another agency, and blanket purchase agreements, which an agency sets up with a vendor to make it easier for the agency to buy certain items repetitively.

  Only some kinds of agreements are contracts. Whether a document the government has signed is a contract is important for several reasons. For example, some agreements are contracts subject to the Contract Disputes Act (CDA). If a vendor has an agreement with the government that is not subject to the CDA, like a settlement agreement that does not become a contract modification, the vendor’s rights and remedies against the government might be limited.

  The focus of this chapter is the procurement contract, in which a government manager may be involved. To clarify the distinction between generic agreements and binding contracts, we first discuss the various types of agreements the government enters into. We then turn to the procurement contract, focusing on the essential elements required for forming an express government contract. Finally, we discuss implied contracts—the kinds of contracts to which government managers worry about inadvertently obligating the government.

  Manager Alert

  Only some kinds of agreements are contracts.

  DIFFERENT KINDS OF AGREEMENTS

  The government enters into a number of agreements that are not procurement contracts. These include grants and cooperative agreements and concession contracts.

  Grants and Cooperative Agreements

  The most common non-procurement agreement is a grant or cooperative agreement. A grant agreement describes a deal between the government and a grantee.

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  CLEP® Introductory Business Law Book + Online, 2nd Ed.

  • Lisa M. Fairfax, Paul Schiff Berman(Authors)
  • 2018(Publication Date)
  • Research & Education Association

    (Publisher)

  CHAPTER 4 CONTRACTS

  4.1 MEANINGS OF TERMS

  Contract

  The Restatement (Second) of Contracts (“Restatement”) is a set of statements reflecting generally agreed upon pronouncements of common law contract rules. Section 1 of the Restatement defines a contract as “a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty.” Thus, at its core, contract law is concerned with enforcing promises between parties, but only those promises that the law recognizes as enforceable. In this respect, a contract is a transaction where one or both parties make a legally enforceable promise. Contract law provides the principles for determining whether a promise is enforceable.

  Express Contract

  An express contract is a promise stated in words, either oral or written.

  Goods

  As will be discussed in Chapter 8 , Article 2 of the UCC governs all transactions for the sale of goods. The UCC defines goods as all things that are movable at the time of the contract.

  Implied Contract

  An implied contract is a promise that is inferred from a person’s conduct or the circumstances of the transaction.

  Promise

  A promise is an undertaking or commitment to act or refrain from acting in a specified way in the future. When an exchange is entirely instantaneous, there is no contract because neither party makes a promise to the other. Thus, if A purchases a clock from B for $100 and at the point of sale A gives B $100 and B gives A the clock, this is an instantaneous exchange. In such an exchange, each party has fully performed her obligation and no promises have been made. The exchange therefore is not a contract, but is referred to as an executed exchange

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