Contracts and agreements are terms that are often used interchangeably, but they are not the same. In legal parlance, the two terms have different meanings.
Agreements are simply the mutual understanding reached between two parties. They could be oral, written, or implied. For example, when you order a coffee at a cafe and pay for it, an implied agreement is formed that you will receive the coffee in exchange for money.
Contracts, on the other hand, are written or oral agreements that are legally binding and enforceable in a court of law. They involve the exchange of goods, services, or money and create an obligation between the parties involved.
Types of contracts:
1. Express contracts: These are contracts that are explicitly stated, either in writing or orally. The parties involved agree to the terms and conditions, and they are legally bound to fulfill their obligations. A written express contract is usually preferred as it provides a clear record of the agreement.
2. Implied contracts: These are unwritten contracts that are formed based on the actions and behaviors of the parties involved. An implied contract can be formed by conduct, such as when a person mows their neighbor`s lawn without being asked, and the neighbor accepts the service.
3. Unilateral contracts: These are contracts in which one party makes a promise in exchange for performance by the other party, such as a reward for finding a lost pet.
4. Bilateral contracts: These are contracts in which both parties make promises to perform certain actions. For example, when you hire a company to perform a service, the company promises to provide the service, and you promise to pay for it.
5. Executed contracts: These are contracts where all the terms and conditions have been fulfilled and completed by both parties.
6. Executory contracts: These are contracts where one or both parties have not yet fulfilled their obligations.
Contracts and agreements form the backbone of business relationships. It is essential to understand the different types of contracts and ensure that all parties involved are clear and in agreement with the terms and conditions. When drafting contracts, it is important to consult with an attorney to ensure that they are legally binding and enforceable.