A
contract is defined as the agreement which the law will seek to enforce as
affecting the legal rights and obligations of contractual parties. The question
that will raise dominance in the hearts of many is whether or not all kinds of
agreements are binding. The answer to this question is objective in nature and not
subjective i.e. not all agreements are binding in nature. For example, social
or domestic agreements are not binding in nature, that is, it is not intended
to be visited with the force of law. This can be viewed in agreements between
spouses. In this case even if all the elements (offer, acceptance and
consideration) that form a contract are visible, the contract will still not be
enforceable in the court of law. See the case of Balfour v Balfour where this
principle was explained.
Classification Of Contact
Just as
every other phenomenon is classified into strata, the concept of contract is
not left out. The following are the different classifications of contract:
- · Formal and simple contract
- · Express and implied contract
- · Bilateral and unilateral contract
FORMAL AND INFORMAL CONTRACT
A formal contract is a contract made by deed
while an informal contract is every other contract.
Formal
Contract: As stated above, a formal contract is contract made by deed. A
contract made by deed is one that is signed, sealed and delivered. Previously,
a contract by deed need not be signed, however, going by the provision of 73 of
the English law of property act 1925, a deed must be signed. The reason for
this is not far fetched. In those days seals were distinctive of the owner,
however today, a seal is no longer distinctive because they are mass produced
and could be gotten like any other commodity in the market. Hence the
requirement of a signature in a deed is compulsory.
Previously,
it was required the deed had to be physically delivered. However, following the
decision in Xenos vs Wickham, all that is needed is evidence that the executor
of the deed made it clear that he wanted to transfer the property to the
recipient.
The
effect of contracting by deed is that in such cases, consideration needs not be
furnished. Thus it is best to use a deed in transferring gifts to
beneficiaries. However, some contracts like transfer in legal estate must be in
a formal contract.
Simple
contract: A simple contract is simply defined as a contract that is not formal.
It could be in writing or oral. Until recently, all informal contracts were
referred to as parol contracts, now patrol refers only oral contract. In the
case of Rann vs Hughes, it was stated that all simple contracts must have
consideration.
Hence,
the presence of consideration is an essential element in the formation of a
simple contract. It is the major distinction between a formal and a simple
contract. This is due to the fact that while a simple contract needs
consideration a formal contract does not need consideration.
EXPRESS AND IMPLIED CONTRACT
Express and implied contracts are another
classification of contract. An express contract is one in which all the
essential terms of the contract have already been agreed to by the parties. For
example in contract for sale of goods essential terms like the price, amount of
goods, time of delivery etc would have been decided upon.
An
implied contract on the other hand is one in which the court would construe the
presence of a contract from the conduct of the parties involved.
BILATERAL AND UNILATERAL CONTRACT
One
more classification of contract is bilateral and unilateral contract. A
bilateral contract is one in which there is an exchange of promises between the
two parties. In this case, the consideration is referred to as an executory
consideration. Also, in this type of contract both the offeror and the offeree
are bound by the terms of the contract.
A
unilateral contract is one in which there is an exchange of a promise for an
act. In this case, the consideration is termed as an executed consideration. In
the case of Carlill vs Carbolic smokeball co, the court held that there was
unilateral contract between the parties because there was the promise of a
reward to anyone who fulfilled an act. In a unilateral contract, only the
offeror is bound by the terms of the contract.
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