Business Law - Contract Classifications

Hey everyone, thanks for joining me for this video. We're going to be talking about some of the different types of contract classifications. Now in our last video, we explored the elements of contracts and so if you're unfamiliar with those, I would recommend taking a look at that video. Now contracts play a fundamental role in various aspects of our lives and understanding their classifications is essential to being able to navigate how contracts work.

So in this video, we're going to be exploring the different types of contracts, including both bilateral as well as unilateral contracts, express and implied contracts as well as valid, void, unenforceable and voidable contracts. So with all of that being said, let's go ahead and get started. First contracts can be classified based on performance, which reflects how they are performed or fulfilled. Now two common types of classifications based on this are what is known as unilateral and bilateral contracts.

In a bilateral contract, both parties make promises to each other. These promises create a mutual obligation and a contract is formed as soon as these parties exchange promises. For example, buying a product from a store is a bilateral contract. You promise to pay and the store promises to deliver a product.

In contrast, a unilateral contract involves one party making a promise that can only be accepted by performing a specific action. Until that action is performed, there is no binding agreement. Now an example of a unilateral contract is a reward poster offering a cash reward for the safe return of a lost pet. The person who posted the reward is obligated to pay only if someone finds and returns the lost pet.

Contracts can also be classified based on formation. In doing so, we have two primary classifications, express as well as implied. Now an express contract is one in which the terms are explicitly stated, either orally or in writing. For example, signing a lease agreement for an apartment establishes an express contract.

All the terms and conditions are clearly outlined and agreed upon by both parties and both parties sign the actual agreement. On the other hand, an implied contract is formed based on the party's conduct even though the terms are not explicitly stated. The obligations are either implied by law or inferred from the circumstances. Now a classic example of an implied contract is when you visit a restaurant and you order a meal.

Although there is no explicit agreement, there is an implied contract that you will pay for your meal. So be sure that you actually do that. Contracts can also be classified based on their enforceability under the law. Now there are four primary classifications here including valid, void, unenforceable, and voidable contracts.

Now these categories are extremely important because they determine the legal enforceability of a contract. Now a valid contract meets all the legal requirements and is enforceable by law. It contains all of the essential elements such as offer, acceptance, consideration, capacity, as well as legality. An example of a valid contract is when you hire a plumber to fix a leaky pipe and both parties agree on the terms and fulfill their obligations.

Avoid contract on the other hand is not legally enforceable right from the beginning. It lacks one of the more essential elements such as illegal subject matter or involving parties who may be lack legal capacity. An unenforceable contract is one that may have been validly formed but cannot be enforced by the courts due to some sort of legal defect. For example, if a contract is not in writing as required by the statute of frauds, it may be unenforceable.

Lastly, we have a voidable contract. Now a voidable contract is one where one party has the option to either enforce or terminate the contract. This typically occurs when one party has been subjected to duress, fraud, misrepresentation or lack legal capacity. For example, if someone enters into a contract under duress, then they have the option to void that contract.

In conclusion, understanding the classifications of contracts is pivotal for navigating legal obligations. Bilateral and unilateral contracts differ in terms of the promises made while express and implied contracts vary in how the terms are established and valid, void, unenforceable and voidable contracts determine the enforceability and legality of agreements. Now by grasping these concepts, we can approach contracts with greater clarity and help us make more informed decisions related to contractual situations. I hope you've enjoyed this lecture on contracts.

Thanks for watching and we'll see you next time.