Comprehensive Volume, 18th Edition
Chapter 12: Nature and Classes
of Contracts: Contracting
on the Internet
Definition of Contract
A contract is a binding agreement between
two or more parties.
A contract arises when an offer is accepted
with contractual intent (the intent to make a
binding agreement) and the acceptance is
communicated properly.
Offer
CONTRACT
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Acceptance
Contract Example
Parties
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This contract is executed between the Lookout Alarm system, herein called System, of
276 West Jackson Street, Phoenix, Arizona, and A.J. Armstrong, herein called
Homeowner, of 737 Inwood Drive, Phoenix, Arizona
Installation System agrees to install a burglar alarm system at the above address of the homeowner,
in accordance with the specifications that are attached hereto.
Payment
Homeowner agrees to pay System for the above installation the sum of $4,863.00,
$663.00 being paid upon execution of this contract and the balance of $4,200.00
being paid within 90 days following satisfactory completion of the work by System.
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2
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Lookout Alarm System
by S.J. McRory
A.J. Armstrong
A.J. Armstrong
S.J. McRory, President
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July 1, 2001
Date
July 1, 2001
Date
1. Name
and Address
of buyer
both
parties
4. 3.
2. Promise
Signatures
5. Date
of both
the
seller
parties
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Parties to a Contract
General:
Promisor
(Obligor)
Promisee
(Obligee)
Parties may be:
individuals, partnerships,
corporations, governments
Examples:
Insurer
Insured
Parties to an Insurance Policy
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Landlord
(Lessor)
Tenant
(Lessee)
Parties Agreeing Upon Occupation
of a Building for Money (a Lease)
Carrier
Shipper
Parties to a Transportation Contract
Vendor
Vendee
Parties to a Sales Contract
Classes of Contracts
FORMAL
contract under seal,
contracts of record,
negotiable
instruments
INFORMAL
OR
EXPRESS
spoken or written
words
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all other contracts
IMPLIED
OR
created by law
based on acts or
conduct of parties
Classes of Contracts
VALID
VOIDABLE
VOID
binding and
enforceable
circumstances
surrounding
execution or lack of
capacity
allows rejection at
option of one party
without legal
effect
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OR
OR
Classes of Contracts
EXECUTED
completely performed
EXECUTORY
OR
BILATERAL
one promise
given in exchange
for another
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something remains
to be done
UNILATERAL
OR
one party promises to
perform after the
other party does some
designated act
Other Types of Contracts
OPTION CONTRACT: gives one
party the right to enter into a second
contract at a later time.
RIGHT OF FIRST REFUSAL:
obligates the offeror to make the offer
to the person holding this right first.
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Quasi Contracts
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In certain situations, the law regards it
as unjust for a person to receive a
benefit and not pay for it.
In such a case, the law of quasi
contracts allows the performing person
to recover the reasonable value of the
benefit conferred on the benefited
person even though no contract between
them requires any payment.
Contractual Liability
Intent
Intent
Offer
Acceptance
Communication
Quasi Contract
Contract
Express
Formal
Executory
Bilateral
Implied
Informal
Executed
Unilateral
Option
First Refusal
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Communication
Unjust Enrichment
No Contract
Avoided Contract
Void Agreement