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Types of Contracts

Know The Types of Formal Contract

Know The Types of Formal Contract

Formal
contracts are those that entail a written agreement between two parties that are
considered to be legally binding and enforceable by law. Formal contracts must
contain an offer, the acceptance of such offer, and the conditions in regards to
payments and goods or services that are to be delivered as a result. Therefore,
any particular kind of written contract can be considered a type of formal
contract agreement.

Contracts
are a very common occurrence and are undertaken by people on a daily basis.
Work contracts, automobile leases, loan agreements, and even signing a credit
card receipt after a purchase are all types of formal contract agreements.
Therefore, to establish the most common types of contracts, one would have to consider
them in relation to a particular field, such as business. In business, the most
common contracts may be Bill of Sale, Purchase Order, Warranty, or Security
Agreement.

Oral Contract

Oral Contract

A contract is a legally binding document or agreement between multiple parties. An oral contract is an agreement that outlines the terms of a contract through spoken communication. In essence, an oral contract is an affirmed contract. However, the only difference is the way in which the agreement is delivered.
In an oral contract, the stipulations of the agreement are agreed upon through oral communications, whereas the stipulations in a traditional contract are transacted via a written document. The ways in which the stipulations of the contract are exchanged are not as important as the stipulations themselves. This simply means that an oral contract, like a traditional written contract, must be upheld given the agreement of both parties. 
In an oral contract, written or physical evidence of the stipulations can be attached to the oral agreement. These attachments are created to further affirm the agreement and ensure the performance of the particular stipulations. Typically, in an oral contract the evidence of the agreement is solidified through the party’s written signature on an attached document. The oral contract is not written, but the evidence attached to the agreement can be affirmed through writing. 
Although the stipulations in an oral contract must be upheld like a written agreement, many jurisdictions in the United States require either a written document outlining the terms or a contract documenting evidence (typically signatures of the parties) that an agreement took place. An oral contract, although not as formal or traditional as a written contract, has been used for multiple landmark agreements.

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.
 

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.

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.

Find Out the Contract Types Here

Find Out the Contract Types Here

Bilateral contracts differ from other forms of contracts because they often do not have consideration, which is usually a monetary amount provided to secure the contract. Bilateral contracts are based on promises and may or may not involve immediate or specific performance.
The most important element of a bilateral contract is the requirement that both parties are equally benefit from the contract. Bilateral contracts cannot be one sided. Business deals usually involve an exchange between the two parties, therefore most business contracts will be bilateral because the parties will promise to perform or refrain from doing something before money is exchanged. If the deal involves the exchange of products, money is rarely exchanged before the product is delivered.


Unilateral Contract: 
Unilateral contracts are often referred to as one sided contracts. In unilateral contracts one party agrees to perform without receiving the assurance that the other party will perform their duties as agreed upon in the contract. Unilateral contracts are usually avoided by most parties as the contract is not enforceable until the performance is completed. In essence, when entering into a unilateral contract you can perform several hours or thousands of dollars’ worth of work without the guarantee that the other party will even pay you.
A homeowner’s insurance policy is an example of a unilateral contract. The policy terms are met by the premium you pay. The insurance company guarantees that they will take care of issues that are covered by the policy. In the event that nothing occurs, you do not receive your money back. It’s one sided in the sense that you perform by paying your premium while the insurance company may or may not have to perform. 

Formal Contract:
Formal contracts are contracts that are required to be written to be enforceable or valid. Formal contracts are not considered legal contracts unless they are written with certain language as required by law. Types of formal contracts include contracts that require seals, negotiable instruments and recognizances.
Sealed contracts are not commonly used today because of the inability to amend the contract. When you enter into a contract under seal you are bound by the terms of the contract until the amendments are also put under seal or the contract is physically destroyed.
A negotiable instrument is a legal contract that states the amount of a fixed payment to be made. An example of a negotiable instrument is a check. Checks state the amount to be paid, who they are payable to and require the signature of the party issuing it in order to be valid, thereby making a check a form of contract.
Recognizances are formal contracts made by parties before the court. When you agree to the terms set forth by the judge in criminal matters you will usually be conditionally released on your own recognizances. A recognizance is considered a contract because the terms are clear and must be agreed to before you are released. They are contracts between a party and the state. 

Informal Contract: 

An informal contract is any contract that does not require specific legal requirements to be deemed valid and enforceable. Informal contracts differ from formal contracts in that they do not have to be sealed, written, or witnessed. Informal contracts are commonly referred to as “social contracts.” An informal contract should be avoided if you do not have complete trust in the person with whom you are entering into contract.
An informal contract, when verbal, requires the belief that the other party will in fact perform despite not having their written assurance that they will do so. Sales contracts are the most common form of informal contracts. Sales contracts are usually specific to each individual situation, and therefore, they will not contain specific legal requirements.
For example, you will not have the same sales contract as an individual who is purchasing a newer vehicle than you at the car dealership. It’s also possible that they could be purchasing the same vehicle as you but your contracts will differ based on factors such as your credit score or vehicle color.

Express Contract:  
In an express contract the terms of the contract are clear and concise. Whether written or oral, the express contract leaves no room for interpretation. The actions of the parties have no effect on the validity of the contract.
An example of an express contract is a parole contract. A parole contract is any contract that is not required to be under seal or of record. Express contracts are based solely on the statements of the party or what is written in the contract.


Implied-in-Fact Contract:
An implied contract is one that requires no oral or written statements but is simply inferred by the actions of either one or both parties involved. Without your knowledge, you enter into implied contracts every day. When you make purchases with your credit card you have entered into an implied contract with your credit card company.
Without words actually being spoken, by either yourself or your credit card company, an implied contract is obvious because they provided you with credit to make your purchase and you in turn must return that money.
When receiving service in any instance you are entering into an implied contract. For example, when you contact a caterer for an important event, it is implied that the caterer will want to be paid upon deliverance of the food. A remedy for implied contracts created by courts is the quasi-contract or implied-in-law contracts. An implied-in-law contract states what should have been obvious in accordance with the original implied contract. An implied-in-law contract requires the party to perform as ordered by the court. 

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.

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.

What are Express Contract

What are Express Contract

One of the major distinctions of types of contracts is between an express contract and an implied in fact contract. An express contract is when the two parties to a contract state the particular terms of the contract. For example, James says to Kyle "I will sell you my iPad for $400." 
 
 
If Kyle responds, "I'll give you $350," should James accept the counteroffer, the two have entered into an express contract. This is an express contract example because the two parties, James and Kyle, explicitly expressed the terms under which the contract would occur. This is an express contract example because the terms are stated by both parties. Of the two types of contracts, express contracts are the more commonly recognized examples. 

Quick Look Into Formal Contract

Quick Look Into Formal ContractA formal contract is a highly specialized type of legal contract. Historically, a sealed formal contract was handled differently than a legal contract to which the parties had not affixed a seal. A formal contract with a seal was found to have a longer statute of limitations than a legal contract that did not have a seal. In modern contract law, however, no distinction is made between a formal contract and an informal contract.