Contracts come in various forms that are necessary to establish legally binding agreements between parties. Understanding the different types of contracts and their purposes is essential in business and other industries. In this article, we’ll explore the most common forms of contracts.
1. Express Contracts
Express contracts are those in which the terms are explicitly stated in writing or orally. These types of contracts are the most common and straightforward, creating a clear understanding of the parties` obligations and expectations. Express contracts are legally binding upon acceptance, and the terms can be enforced in court.
2. Implied Contracts
Implied contracts are created by actions, behavior, or circumstances that suggest a contractual agreement. Unlike express contracts, implied contracts are not explicitly stated, but the terms are inferred from the parties` actions or conduct. For instance, if an employee continues to work after the expiration of their employment contract, it implies an agreement between the employee and employer to extend the contract.
3. Unilateral Contracts
A unilateral contract is a one-sided arrangement in which one party makes an offer to another party to take specific action. In this type of contract, the offeror promises to do something if the offeree performs a particular act. For example, a business may offer a reward for information leading to the arrest of armed robbers within their premises. If someone provides the information, they are entitled to the reward offered.
4. Bilateral Contracts
A bilateral contract is a basic agreement in which both parties exchange promises and agree to perform specific actions. Each party is bound by the terms of the agreement. Employment contracts, purchase agreements, and lease agreements are common examples of bilateral contracts.
5. Executed Contracts
An executed contract is a legally binding agreement in which all parties have fulfilled their obligations. The terms of the contract have been met, and the contract is considered closed. Once executed, the contract cannot be changed, and all parties are released from their obligations.
6. Executory Contracts
An executory contract is a contract in which one or more parties have not yet fulfilled their obligations. It is an agreement in which the terms are yet to be fully performed. In this type of contract, one party may have already performed their obligations, while the other party is yet to perform theirs.
In conclusion, contracts are essential tools for establishing legally binding agreements between parties. The different types of contracts available serve different purposes and are necessary in various industries. It`s critical to understand the types of contracts to determine which is most suitable for your situation. Always ensure that you read and understand the terms of a contract before signing it to avoid future disagreements.