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Types of Contracts

Explore the Types of Contracts

Explore the Types of Contracts

There are six types of contracts, which can be broken down into three pairs of related terms. The first pair is bilateral/unilateral contracts. The second is formal/informal contracts. The third type is express/implied-in-fact contracts.
Bilateral and unilateral contracts are distinguished by the relationships between the offeror and offeree. In a bilateral contract, both parties must agree to the terms of the contract before it goes into effect. In a unilateral contract, the offeror presents terms to the general public. A unilateral contract only becomes binding once a second party seeks to collect on the contract.
A unilateral contract is formed if Megan puts up a poster offering a reward for her lost wallet, while a bilateral contract would be formed if Megan offered Rosemary $50 to find her wallet.
Although formal and informal contracts were both once common, informal contracts have largely replaced formal contracts. A formal contract is any contract which is required by law to take a specific form. An informal contract is any other type of contract.
An express contract is formed when both parties state what they intend to do while the contract is being formed. An implied-in-fact contract is formed by the actions of the parties. An implied contract does not require any verbal statement by the parties to be put into effect.

Understanding Contract for Deed

Understanding Contract for Deed

A contract for deed is an agreement that outlines the process for a purchase of a property. A contract for deed is a legally binding document that affirms the process required to obtain a piece of property. Dissimilar to many notions, a contract for deed does not transfer a property to the intended buyer, but instead establishes the specific terms that are necessary for the potential buyer to fulfill in order to legally obtain the property in question.
 
 
The major specification offered in a contract for deed outlines the payment plans to the seller. A start date, as well as the price of the property and a corresponding payment schedule are documented in a contract for deed. 
 
 
In essence, a contract for deed is a deed that legally states or affirms the specifics associated with the transfer of a property. The contract for deed is the starting point for the transfer of an estate. It acknowledges the buyer’s intentions to purchase the property, along with the seller’s desire to draw a payment schedule for the buyer. As a result of this relationship, the contract for deed is a negotiable contract.
 
 
The deed initiates the seller’s willingness to transfer the property but it also requires the buyer to agree on an intended payment schedule. In addition, dissimilar to a mortgage or purchase of a house, a contract for deed does not require a down payment. Therefore, the contract for deed is a workable situation, meaning if the seller believes the prospective buyer can make periodic payments, regardless of the inclusion of a down payment, the property can be transferred under a contract for deed.
 

Understanding Bilateral Contract

Understanding Bilateral Contract

A bilateral contract is the most frequently understood instance of contract. All business contracts in which each party makes a promise to the other party in the contract is a bilateral contract. Bilateral means that both sides are involved equally.
Bilateral business contracts bind both sides to perform an action. Bilateral business contracts give rights to both parties, as well as assigning each party with an obligation to action which they are expected to discharge. In bilateral business contracts, both sides have given consideration. 
As a result of these three circumstances the normal requirements of a contract have been fulfilled. A bilateral contract requires an acknowledgment by the offeror of the oferee’s acceptance.
Bilateral business contracts are mutually binding to both the offeror and the offeree. Depending on the type of contract, the parties in business contracts may also be referred to as promisors and promisees. A bilateral business contract becomes binding to both parties at the moment that the promises are exchanged by both parties. 
Unless obviously intended otherwise, business contracts are presumed to be bilateral in nature.
In order to make the definition of bilateral business contracts more readily apparent, a bilateral contract may be referred to as a contract that only entails an exchange of promises. Contracts that call for performance at the moment that the contract is made, or the exchanging of a promise for a promise are not considered bilateral contracts..
Although many bilateral business contracts involve negotiation, this is merely a common element of bilateral business contracts, not an essential element.
Bilateral business contracts are different from unilateral contracts in that there is a mutual exchange of responsibility.

Don’t Miss These Important Facts About Government Contracts

Don't Miss These Important Facts About Government Contracts


Government contracts are incentive-based agreements that many small business owners take advantage of to increase profits or cut costs. A Government contractor can be included in nearly any business operation. Government contractors enable both private and public corporations or entities to work in accordance with the Government property that the specific project is located in.


Government contractors can incorporate a number of incentives or deals with various companies. In general, a Government contractor is a privately funded agency that produces a wide array of services or goods that are under contract for a particular Government agency. 


In a Government contract, the terms of the agreement specify various costs and specific agreements. Often the terms of a Government contract specify a profit margin or cost plus model. 


As is common with all contracts, a Government contract is governed by specific laws. The scope of laws associated with a Government contractor typically require a Government agency to award contracts to the lowest bidder or the entity with a direct opportunity to benefit the widest number of individuals. 


The work of Government contractors are seen throughout numerous communities and jurisdictions. Government contracts are awarded to companies who supply communities with public services such as the building of roads, parks, educational services, local police enforcement agencies, and seemingly any other public good that offers a community a specific benefit or necessity.

Unilateral Contract Explained

Unilateral Contract Explained

An unilateral business contact does not fulfill the normal understanding of contract. Unilateral business contracts occur frequently however. Unilateral means actions done by one side only.
In an unilateral business contract, only one party has agreed to undertake an action. Unilateral contracts do not require the party offering the contract be informed of any other party’s acceptance of the contract. This is one of the major differences between an unilateral business contract and a bilateral business contract. 
A unilateral business contract sometimes provides protection to both the party offering the contract and the party accepting the contract. If the terms of the unilateral contract can only be met once, for instance in response to a reward poster posted for the return of a pet, then the party offering the contract has protection from multiple parties attempting to fulfill the contract.
Unilateral business contracts are often offered by way of advertising posters. For instance, Rob may create a poster offering $50 for the return of his lost dog. This constitutes an offer in an unilateral contract. If Dylan finds the dog Rob is looking for, no contract has been created until Dylan brings the dog to Rob and asks for payment. At this time, a contract is in effect because both parties can supply a consideration which would fulfill the terms of the contract. Rob’s consideration is the money, and Dylan’s consideration is returning the dog.
Another common example of a unilateral contract is an insurance agreement. An insurance agreement is an unilateral contract because there is no future obligation of action placed on the insured. The only obligation is on behalf of the insurance company.

Read This Before Revoking A Trust

Read This Before Revoking A Trust

A trust can be revoked leaving a person to properly resume ownership of their assets as long as the revocation is done in a legal manner. If a person is looking to revoke a trust, they first must contact their lawyer, trustee, and all of the beneficiaries listed on the trust. 
Trusts insure that a person’s assets would be protected after they have passed. After an individual gets consent from all parties involved in the trust, they must then sign the necessary documentation which their state requires. Laws and documents pertaining to trusts vary state by state. 
Generally speaking, an individual must prove that revoking the trust is in the best interest of everyone involved.  The lawyer who helped create the trust should be able to help provide reasons on why the trust is no longer suitable for the individuals involved. Common reasons include: alimony payments or a change in income. Some states will then require an individual to immediately sign over a new trust after revoking the original one. 

Implied Contract At A Glance

Implied Contract At A Glance

Implied Contract
Contract terms in an implied contract are by definition never explicitly stated. If they were, the contract would become an express contract.
In an implied contract, the contract terms are determined by analyzing the actions of the parties.

Understanding Service Contracts

Understanding Service Contracts

A service contract is a form of agreement that is typically found in the purchase of a major asset. When an individual buys a car or a major appliance, they are commonly offered a service contract template by the issuing retail store. For many consumers, service contracts offer the purchaser a distinct insurance policy that is aligned with the product’s expected use.
A service contract template will differ based on the product purchased. However, in general, service contracts offer the purchaser an insurance policy to protect against repair hassles.
Service contracts are notably attached to the purchase of automobiles. It is estimated that nearly 50% of new car buyers purchase service contracts to protect against damage that is not covered by the product’s warranty. Service contracts cover a specific part or function of the appliance or product.
For instance, in an automobile purchase, a service contract template can cover a specific function or part of the automobile such as the tires. The costs associated with service contracts deviate based on crucial variables such as the length and amount of coverage provided. 
A service contract template is similar to a warranty. It provides coverage against repair or maintenance for a specific time period and for a specific function or part of the appliance. The major difference between a warranty and a service contract is that a warranty is included in the purchase price, while the service contract is sold separately and is an extra cost that provides additional coverage for the product.

Understanding Futures Contract

Understanding Futures Contract

A futures
contract is a financial agreement that is a popular investment to yield a
profit for an individual or business. A futures contract differentiates from a
standard equity purchase where an individual goes into the market and obtains a
stock through the seller’s asking price.

A futures
contract is a standardized agreement between a buyer and seller where the
parties agree to exchange equity for a specified price, a standardized
quantity, at a specific date in the near future. 

The contracts in a futures
agreement are for regular equities; however, the transaction is agreed upon for
future fluctuations. 

Futures contracts, as opposed to regular equity
contracts, are purchased and sold on the futures exchange. Futures contracts
are not direct purchases of securities like traditional equity contracts,
bonds, or government investments, but instead are a form of derivatives. 

When
the buyer agrees to purchase a futures contract, the underlying asset or equity
assumes a long position in a portfolio while the seller assumes the short
position.

The price of
a futures contract is calculated through the equilibrium between supply and
demand among the market. The security in a futures contract can be seemingly
any asset; stocks, currencies, interest rates, or indexes can be coupled into a
futures contract. Whatever security can fluctuate in price changes can be
exchanged under a futures contract. 

The most significant portion of the futures
contract is the fluctuation of the
underlying security’s price and the delivery date or date at which the contract
matures. 

Informal Contract At Glance

Informal Contract At Glance

An informal contract is also known as a parole contract. Contracts law consider most contracts currently in effect to be informal contracts. An informal contract is defined in contrast to a formal contract. Contracts law distinguish between the two by calling an informal contract any contract that is not signed under seal and is not under record. An informal contract may be written or oral.
An informal contract has the full weight of law so long as the normal requirements of a contract have been met. One draw back to an informal contract is that it can be difficult to hold a party in breach of the contract to the terms to which both parties have agreed.
Any contract that specific contracts law do not require to take a particular format are considered an informal contract. Leases, sales contracts, and employment contracts are all common examples of informal contracts. Although these contracts may have specific forms on which they are printed on, they are not formal contracts because there is no contracts law which mandates that these contracts be placed in a particular manner. A preprinted form does not change the status of any one of these items as an example of an informal contract.

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