Contract Laws Essay

Custom Student Mr. Teacher ENG 1001-04 30 August 2016

Contract Laws

When it comes the laws of business there are a broad range of categories and topics. A topic that we would find when studying business law is contracts. “A contract is a legally enforceable agreement between two or more people.” (Rogers, 2012) In the world we live in learning about contract laws is very vital when entering into one. We must be aware that there is more than just on type of contract and there are several steps that both parties must follow before any contract can be legal.

There are several types of contracts that individuals can enter. These types are expressed, implied, bilateral, unilateral, simple, formal and quasi contracts. An express contract are “formed by the express language of the parties—the actual words they use in their agreement—and can be either written or oral.” (Rogers, 2012) This type of contract does not have to be in writing. An expressed contract contains the offer, acceptance and consideration elements of a contract. Express contracts are usually compared to implied contracts. Implied contacts are “formed not by the express words of the parties, but rather by their actions.” (Rogers, 2012) With this type of contract the agreement is implied by actions. There are no expressed words within an implied contract. It can be either implied in fact or in law. If a contract will result in inequity or harm it will not be implied. If there is any doubt or discrepancy exists, then the court might not conclude a contractual relationship. If an implication arises that they have jointly assented to a new contract that contains the same requirements as the old agreement.

Another type of contract is a bilateral contract. A bilateral contract is a” reciprocal arrangement between two parties under which both parties promise to perform an act in exchange for the other party’s act” ( When entering into a bilateral contract there is a joint agreement among the two parties that entails the performance of an act. The promise made by one party constitutes sufficient consideration for the promise made by the other party. It is a common contract because we enter into a bilateral contract everything we make a purchase, order or receive any kind of treatment. Bilateral contracts are compared to unilateral contract. Unilateral contract are agreements that deal with a promise that is made by only one person involved in the contract. This agreement is when there is an exchange for the performance or non-performance of an act by the other party. Only one of the contracting parties can be enforced to comply with contract.

This type of contract is one-sided because only the offeror is legally bound in complying with the terms of the contract. The offeree can comply or refrain from performing the act, but he or she cannot be sued if they do not comply. If you accept an offer from a unilateral contract it cannot be achieved by making another agreement only by performance or non-performance of some particular act. An offer can be revoked until the act has been performed or there was no act completed and the date has passed. The following contract is called a simple contract. It is in no way a lawfully recorded or legitimately sealed contract, but breeches are still frequently ruled on by a judge. It “is any oral or written contract that is not required to follow a specific form, or be signed, witnessed, or sealed.” (Rogers, 2012).

They are not necessarily formalized contracts and do not entail court proceedings in order to make them binding. They are simply an agreement that is among the parties involved. They are usually compared to formal contracts. Formal contract are “a written agreement between two parties that are considered to be legally binding and enforced my law” ( They must be in writing, signed and seal by all parties entering into the contract. In order for a formal contract to be valid it must contain three elements, which are the offer, the acceptance and a payment for the services provided or goods delivered. This type of contract eliminates any uncertainty regarding its terms and conditions. It contains a preface section which is utilized to clearly define the essentials terms that are utilized within the contract. This helps in eliminating redundancy in the use of common language. It also insures substantive terms of the contract that are described and referenced in the contract.

Quasi contracts are the last type of contract discussed in the text. Quasi contracts are not a realistic contract. “They are a remedy that a court may offer to make things fair.” (Rogers, 2012). This type of contract is implied by law. Courts will imply a fictional contract to require one party to return benefits to the other party where unjust enrichment has occurred. Unjust enrichment doctrine deals with the equality of a quasi contract. It states that no party should profit at the expense of the other without making restitution of a reasonable value. When there is no oral or written agreement, courts depend on this doctrine to provide a legal remedy for a quasi contract.

A Quasi contract can be compared to an implied contract. There are two types of implied contracts. These types are Implied-in-fact and Implied-by-law. A quasi contract is considered to be an Implied-by-law. It is different from an implied-in-fact because the courts treat the former as an express written contract because of the actions and words that both parties have expressed. Even though neither party has verbally expressed the acceptance of the contract their actions might be viewed differently.

A contracted can be valid and enforceable, but can also be found to be unenforceable and can be voided. In order for a contract to be valid and enforceable it must contain the five elements of a contract to be legally binding. These elements are offer, acceptance, consideration, legality and capacity. The first element of a valid contract is the offer. An offer “is an invitation for another to enter into a contract” (Rogers, 2012). Offers can be verbal or written, but must at all times be clear terms. They can be bilateral or unilateral terms. They are not legally binding. Offers can be voided is any of the individuals involved cannot or do not comply with their promise. Offers can also be voided, repealed or annulled after parties have accepted the offer, unless there is a clause where it states that revocations are not allowed.

The following element is acceptance. An acceptance “is an acquiescence to enter into a contract under the terms of the offer” (Rogers, 2012). Once an offer is made the parties must agree on the terms. All parties must be willing to enter into the agreement. Acceptances can be implied or expressed. They can be directed to all parties involved or just one person. There are times when the individual making the offer will invite the person accepting the offer by actually performing the acts that the offeror is bargaining for. This occurs when special tribulations of notification, revoking and confidence in the form of limited performance can occur.

Consideration is the next element of a valid contract. A consideration is “anything of legal value that is asked for and received as the price for entering into a contract” (Rogers, 2012). For a contract to be considered to be legally binding it must be supported by a valuable consideration. For instance, a party is required to do something in exchange for the promise that was made in a benefit of value. It is what each individual in the contact provides to the other as the established value for the other’s promise. For the most part, considerations are usually a payment of money, but are not always. At times they can be a promise to do something such as a type of work in return for something.

The fourth element is legality. This is “an agreement may be considered illegal if it would violate a statute; result in commission of a tort; or violate public policy.” (Rogers, 2012). In contract law, legality of purpose is required of every enforceable contract. Agreement of a social nature are presumed not to be legally binding, but with evidence can be rebutted in court. Also, any domestic agreements such as agreements created by a parent and a child are generally unenforceable on the basis of the system of law.

The last element is capacity. Capacity is “the mental competency of an individual and also with special rules for people who are under legal age” (Rogers, 2012). In other words, it deals with the competence of all parties. In order for an individual to enter into a contract they must be capable to do so. All parties entering the contract have to be over the legal age, mentally capable and cannot be under the influence of drugs or alcohol. If a contract is made with an individual that is under the age of 18 or 21, depending on the jurisdiction, the contract is voidable, but is legal and enforceable until or unless the individual revokes it. In the eyes of the law, individuals under the age of 18 or 21 are deemed to be immature and naïve to enter into a contract. The individual may avoid the legal duty to perform the terms of the agreement without being liable of breach of contract.

All parties must also be mentally capable of entering into a contract. If a party does not understand the nature and/or consequences of the contract when it is formed the contract can be voided. An individual that lacks the legal capacity can be declared incompetent in a court and can be appointed a legal guardian. If someone is to enter into a contract with someone who is not mentally capable the contract will be voided and there will not be any legal effects because neither party may be legally compelled to comply with the terms. Lastly, no one entering in to a contract can be intoxicated. All parties must be sober at the time of entering a contract in order for the contract to be deemed enforceable. When someone is under the influence they are not capable of knowing what they are doing and why. They might also not comprehend the terms of the contract which makes it unenforceable.

A contact can appear to be legally binding because it may contain all the elements of a contract, but there are defenses to a contract that can also make a contract unenforceable and voidable. There are two types of defense to a contract, which are lack of genuine assent and lack of proper form. Genuine assent or “meeting on the minds” is a criteria utilized to determine validity of acceptance of an offer for a contract. This occurs when the acceptance of a contract is secured through improper or illegal means such as fraud, mistake, duress and undue influence. The first type of genuine assent that will be discussed is fraud. Fraud is the premeditated falsification of an essential matter of the contract. When there is an existence of fraud in a contractual proceeding it makes the contract unenforceable and can be voided by the party upon whom the deception was perpetrated.

According to our text, there are two types of fraud, which are fraud in the execution and fraud in the inducement. Fraud in the execution merely occurs when one of the individuals who entered in to the contract isn’t aware that they are entering in to one. The second fraud is when both parties are aware they are entering into the contract, but one of the parties is deceived when entering into it. The following type that can make a contract unenforceable and invalid is a mistake. A mistake is also known as a mutual mistake. When there is a mistake this means that both parties made a mistake to something that is vital to the contract. Just because one party can make a mistake doesn’t necessarily mean that the contract is voidable. In order for it to be considered as unenforceable it must have a significant effect on the exchange or bargaining development.

The following factor is duress. Duress is when one party forces the other party to sign a contract. The force can be either physical or emotional pressure. When there is use of duress the contract is voidable by the party that was under duress during signing. Duress can be defined by three categories, which are actual or threatened violence to an individual, threats to an individual’s property and/or economic duress. Economic duress is the more difficult to prove because you have to establish the boundaries of acceptance behavior of this kind of pressure. Duress is sometimes compared to undue influence, but there are different. As mentioned above, duress deals with someone being pressured into signing the contract, whereas undue influence is when a party is manipulated in to signing the contract.

If one party has put inequitable and inappropriate pressure on the other in the discussions leading to the signing of the contract, common law will allow duress and undue influence to allow for the terms of the contract to be set aside. Common laws are laws “made by the decisions of judges in individual cases. “ (Rogers, 2012). Undue influence is easy to recognize because it can involve the parties having a fiduciary relationship or one of the members involved depends on another due to their age, illness, infirmity, etc. A fiduciary relationship is a relationship where one individual has a responsibility to act for the other’s benefit. When undue influence occurs the individual who is suppose to be helping the other person out is taking advantage of that person.

Lastly, the second type of defense to a contract as listed above is lacks proper form. This is generally when it lacks writing. There are certain types of contracts that are required to be in writing, but at times we aren’t aware. If these types of contracts are not in writing then they cannot be enforced.

It is important to learn about contract laws. They are the foundation of our society. Since we enter into contracts on a daily bases we should be aware of these laws. Contracts can be complicated and having knowledge of the different types and what makes them enforceable or voided can really be helpful. If there were no laws on contract then the agreements we make could become impractical and unworkable.

Lewinsohn, J. L. (1914). Contract Distinguished From Quasi Contract. California Law Review, 2(3), 171.
Rogers, S. (2012). Essentials of Business Law. San Diego, CA: Bridgepoint Education, Inc. Smith, C. A. (2012). Contracts. Information regarding elements of a contract and remedies for breach. Undefined. (n.d.). Bilateral Contract. In Retrieved May 2, 2014, from Undefined. (n.d.). Know the types of Formal Contract. In Retrieved May 2, 2014, from

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