bilateral contract

Chapter 6
Overview and
of Contracts
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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.
Elements of a Contract
• Mutual assent
• Capacity to contract
• Consideration
• Legal purpose
Sources of Contract Law
• State common law
– Services or Real Estate
• Legal
• Accounting
• Engineering
• State statutory law
– Uniform Commercial Code (UCC)
• Goods
• Leasing of equipment
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
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.
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.
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.
Voidable versus Unenforceable
• A voidable contract is one that one party
may, at its option, either disaffirm or
• An unenforceable contract is one that
meets the elements required by law for an
otherwise binding agreement, but is
subject to a legal defense.
Formal vs. Informal Contracts
• A formal contract is one that meets one
or more specific requirements
of construction.
– Example: Negotiable instruments
• If 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.
Executed vs. Executory Contracts
• An executed contract is a contract that is
• 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.
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.