- The classification of contract
- The difference between the various classes of contract
THE CLASSIFICATION OF CONTRACT
Contracts can be classified into various categories based on their nature, formation, performance, enforceability, etc. Here's a breakdown:
1. Classification by form:
a. Express Contract: this are contracts clearly stated orally or in writing.
b. Implied contract: this are contracts created by the conduct or actions of the parties involved.
c. Quasi Contract: this is not an actual contract, but a legal remedy to prevent unjust enrichment.
2. Classification according to implementation status:
a. Executed Contract: this is the contract that has been fully performed by both parties.
b. Enforceable Contract: this is the contract where there are still obligations that has not yet been performed by one or both parties.
3. Classification by performance:
a. Unilateral Contract: this is the type of contract where a promise is made by one party in exchange for an action by another party.
b. Bilateral Contract: this is the type of contract where both parties make a commitment to each other.
4. Classification based on enforceability:
a. Valid Contract: this is type of contract to at meets all legal requirements and is legally enforceable.
b. Void Contract: this is the type of contract that lacks essential elements and is unenforceable from the outset.
c. Voidable Contract: this is the type of contract where due to a legal defect, a party has the option of enforcing or rescinding a contract.
d. Unenforceable Contract: this is the type of contract that may be valid but unenforceable due to legal technicalities or statute of limitations.
Case:
1. Carlill v Carbolic Smoke Ball Company (1892): this case demonstrated the concept of a unilateral contract where performance (which is the use of the product as directed) constitutes acceptance and creates a binding contract.
2. Williams v. Walker-Thomas Furniture Co. (1965): this case emphasized the concept of an unconscionable contract, whereby a unilateral term that heavily favors one party may render the contract unenforceable as unfair.
3. Lucy v. Zehmer (1954): this case showed that even in a joking or informal setting, if the parties objectively intended to establish a legal relationship, it could be considered a valid contract.
THE DIFFERENCE BETWEEN THE VARIOUS CLASSES OF CONTRACT
The differences between the different categories of contracts can be summarized based on their main characteristics and famous legal cases:
1. Express contract and implied contract:
a. Express contract: this is a clearly stated contract, written or oral, with clear terms and conditions.
See the case of Raffles v. Wichelhaus (1864), where conflicting interpretations of a contractual term (“Peerless” ship) led to a lack of consensus, illustrating the importance of clear language in express contracts.
b. Implied contract: this is a contract formed by actions, conduct, or circumstances other than an express oral or written agreement.
See the case of Merritt v. Merritt (1970) which illustrates the transition from an implied to an express contract, whereby an initially implied separation agreement between spouses becomes legally binding upon the fulfillment of certain conditions contract.
2. Executed contracts and enforceable contracts:
a. Executed contract: this is a contract in which all parties have fully performed their obligations.
See the case of Lampleigh v Braithwait (1615), where the court enforced the agreement even though it was made before a formal contract because one party had performed its obligations.
b. Enforceable contract: this is a contract in which one or both parties have not performed some or all of their obligations.
See the case of White and Carter (Councils) Ltd v. McGregor (1962) which emphasized the enforceability of a contract even if one party attempts to terminate the contract early, as long as the other party is willing to perform its obligations.
3. Void contracts and voidable contracts:
a. Void contract: this is a contract that lacks essential elements (e.g. legality, capacity) from the outset and is therefore deemed unenforceable.
See the case of Jones v. Star Credit Corporation (1969) which highlighted the fact that a contract is void due to illegal terms, making it unenforceable.
b. Voidable contract: this is a contract in which a defect allows a party to void the contract at its sole discretion.
See the case of Smith v. Hughes (1871), where the court held that a misunderstanding of a term did not invalidate a contract because the seller was aware of the misunderstanding and failed to correct it.
4. Unilateral contracts and bilateral contracts:
a. Unilateral contract: this is a contract in which one party promises to perform a certain act in exchange for performance by another party.
See the case of Carlill v. Carbolic Smoke Ball Co. (1892) which illustrates the acceptance of performance in a unilateral contract scenario.
b. Bilateral contract: this is a contract involving mutual promises between parties.
See the case of Merritt v. Merritt (1970) which changed the nature of the agreement between the parties by converting it from an implied contract to a bilateral contract when certain conditions were met.
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