2 Definition of a Contract Contracts are enforceable agreements between the parties.One generally accepted definition of a contract is a promise or a set of promises enforceable by law.
3 Elements of a Contract Mutual assent Capacity to contract ConsiderationLegal purpose
4 Sources of Contract Law State common lawServices or Real EstateLegalAccountingEngineeringState statutory lawUniform Commercial Code (UCC)GoodsLeasing of equipment
5 Written vs. Oral Contracts While the word contract is often used to describe a written document, many contracts are not in writing and yet are enforceable.
6 Bilateral Contracts vs. Unilateral Contracts A bilateral contract involves two promises and two performances.A unilateral contract involves one promise, followed by one performance, which then triggers a second performance.
7 Express Contracts vs. Implied Contracts vs. Quasi-Contracts An express contract is created when the parties have knowingly and intentionally agreed on the promises and performances.An implied contract is one in which the agreement is reached by the parties’ actions.The law permits quasi-contracts to be enforceable where one party suffers losses as a result of another party’s unjust enrichment.
8 Valid vs. Void Contracts When a contract has the necessary elements, it is said to be a valid contract.Void contracts are agreements that have not been formed in conformance with the law from the outset of the agreement and, thus, cannot be enforced by either party.
9 Voidable versus Unenforceable Contracts A voidable contract is one that one party may, at its option, either disaffirm or enforce.An unenforceable contract is one that meets the elements required by law for an otherwise binding agreement, but is subject to a legal defense.
10 Formal vs. Informal Contracts A formal contract is one that meets one or more specific requirementsof construction.Example: Negotiable instrumentsIf a contract is not required to be under seal by statute or required to possess a certain form or language, it will be considered an informal contract.
11 Executed vs. Executory Contracts An executed contract is a contract that is completed.An executory contract is one that is not yet completed. When one party still has duties to perform under a contract, we describe those duties as being executory.
12 Entire vs. Divisible Contracts An entire contract one in which each component of the contract is dependent on every other component.A divisible contract is one that can be broken up into independent parts, each part able to stand alone.