Become an Expert on Types of Contracts
There are many different contracts that exist that support and protect business transactions. Contracts are defined as a written agreement between two more parties specifying the conditions of which the agreement is based on.The need for contracts are essential to protecting business transactions, since the conditions of the contract can be upheld in the court of law. All contracts outline the promises of each party along with specific remedies that would take place in the event that a contract is breached.
All contracts are usually comprised of seven elements agreement, consideration, capacity to contract, legal purpose, legality of form, as well as intention and consent to contract. The most traditional contract type is a contract under seal.
This type of contract is a enforceable stamped and sealed legal document, with the seal indicating legal consequences for any party in violation of contract. The seal of a contract is a old practice that made contract documents official. In previous times if a document was not represented by a sealed stamp it was not considered official by the statues of the law. However many jurisdictions today acknowledge contracts that are not as formal.
One type of informal contract acknowledged by the courts today are express contracts. Express contracts are either drawn orally or verbally during the time of transaction. Usually there is a distinctive written or verbal offer that accompanies the contract and terms of agreement. A more complicated contract is a contract that is implied, due to the number of variances that support the conditions of the contract.
The nature of a implied contract exists from the conditions that may arise as a result of a mutual agreement and the terms of these conditions are usually not clearly identified. However an implied contract is still justifiable in the court of law. A contract that contains reciprocal promises are identified as bilateral contract types. In this type of contract one party promises a form of action in return for the promises described by another party.
The opposite to this contract is known as a unilateral contract where only one party is making a promise. Under the conditions of this contract the promising party has the right to seek legal action if the other party fails to abide by specified conditions.
Other contract types are either one sided or balanced contracts established my mutual parties. One type of one sided contract is known as the unconscionable contract, which usually benefits the person with a higher bargaining power. These contracts are usually unfair to all other parties who do not have any bargaining power. Unconscionable contracts usually targets people who are uneducated consumers unable to do comparative shopping.
Although this type of contract is considered unfair, it is still permissible in the court of law. Another one sided contract is known as a adhesion contract, often described as the "take it or leave it" contract. This contract type is usually drafted by the party with a higher advantage leaving the weaker party the availability to only accept or decline.
A more balanced contract is known as the aleatory contract where both parties assume risk for any possible occurrence. Some insurance policies are forms of aleatory contracts.
Different forms of contract types provide insurance for participating parties. It also holds parties accountable for their actions. All contracts take contributing parties to acknowledge the terms of agreement in order for a contract to be valid.
NEXT: Figure Out the Offer & Acceptance Formula
