What Are the Four Types of Legal Contracts

When it comes to legal transactions, contracts are an essential component. In simple terms, a contract is an agreement between two or more parties that defines the terms and conditions of an exchange of goods, services, or assets. The enforceability of a contract is dependent on several factors, including the type of contract being used. In this article, we`ll look at the four types of legal contracts that are commonly used in business.

1. Express Contracts

Express contracts are those that are explicitly stated and agreed upon by both parties. The terms of the contract are clearly outlined in writing, and both parties agree to the terms before signing. Express contracts are the most common type of contract used in business. They can be used for various transactions, including the sale of goods, services, or real estate.

2. Implied Contracts

Unlike express contracts, implied contracts are not explicitly stated in writing, but the agreement is implied by the actions of both parties. The agreement can be inferred from the parties` conduct, and there is an assumption that they intended to enter into a contractual relationship. For example, if you order food at a restaurant, an implied contract is created between you and the restaurant, even if the terms of the agreement are not explicitly stated.

3. Unilateral Contracts

A unilateral contract is a legal agreement in which one party agrees to perform a specific action in exchange for another party`s performance of a specified task. The second party does not have to agree to the terms of the contract before the first party begins performing the action. Instead, the second party agrees to the terms by performing the specified task. An example of a unilateral contract is a reward offer for finding a lost item.

4. Executed Contracts

An executed contract is a legal agreement that has been fully performed by both parties. In other words, all parties have fulfilled their obligations under the terms of the contract. An executed contract is legally binding and cannot be changed unless both parties agree to the changes. An example of an executed contract is a rental agreement in which the tenant has paid rent, and the landlord has provided the tenant with access to the property.

Conclusion

Contracts are an essential component of legal transactions, and understanding the different types of contracts is crucial to ensure that your agreements are legally binding. Whether it`s an express contract, implied contract, unilateral contract, or executed contract, each type has its unique features and is used for different transactions. As a business owner, it`s important to consult with a legal professional to ensure that your contracts are valid and enforceable.