Contract Types and Their Legal Effects

Executory Contract

A contract in progress; one or more terms of the contract remain undone.

Executed Contract

A contract in which all the parties have met all terms of the contract.

Unilateral Contract

A contract in which consideration (such as a promise) is only given by one party to the other.

Invalid Contract

A contract in which one or more of the essential elements is missing.

Valid Contract

A contract that contains all the essential elements.

Implied Contract

A contract that is based on the actions or behaviors of the parties, not on words.

Voidable Contract

A contract that may be cancelled by one or more parties for one of several reasons. It may be missing an essential element and thus invalid; it may contain a mistake or a misrepresentation, or it may have been created or executed by a party under duress.

Unenforceable Contract

A contract that will not hold up in court.

Enforceable Contract

A contract that will stand up in court.

Void Contract

A contract with no legal force or effect.

Statute of Fraud

A law requiring contracts conveying ownership in real property to be in writing to be enforceable

Contract

An agreement between competent legal parties to do or to refrain from some legal act in exchange for consideration.

In a purchase offer, is earnest money required to have a binding contract?

No, because the buyer's consideration is the promise to buy.

ou receive an offer in the mail that says you're eligible to win a cash prize if you place some stickers on a form and return it to the sender. What type of contract is this?

Unilateral contract

The statute of frauds states that if a contract transferring ownership of real property is not in writing it is __________.

Void

Rex needs to handle some money he acquired during an "unsavory" business deal. He agrees to sign his boat over to his colleague, Ben, if Ben can launder the money and return it to Rex as part of a legal business dealing. What kind of contract do Rex and Ben have?

Void (A contract for an illegal purpose is void)

Which of these situations represents a unilateral contract?

Which of these situations represents a unilateral contract?

Two intoxicated co-workers sign a contract in which they agree to marry each other if they're both still single when they reach age 40. Which of the following is true about this contract?

his is a voidable contract because the parties were intoxicated at the time they signed it.

What's the main point of the statute of frauds?

Real estate purchase and sale contracts must be in writing to be enforceable.

Sales contracts are:

-Express -Bilateral -Valid (in writing, for starters) -Enforceable -Executed or executory

Statute of Frauds Requirements

-The essential terms and conditions of the contract must be present. -The contracting parties must be identified. -The contract subject matter must be clearly identified.

Bilateral Contract

A mutual contract that involves an exchange of promises or other consideration between two parties.

Express Contract

A stated (written or oral) agreement between two parties to specific terms.

Your neighbor hires a middle school student to mow his lawn every two weeks. He draws up a written contract in which he clearly outlines the student's mowing responsibilities and the payment the student will receive in return. Which of the following is true in this situation?

If the neighbor and the student are content to uphold their agreement, the fact that it's not legally binding doesn't matter.

Which of the following states that, in certain cases, oral evidence can be used to support or complete an otherwise incomplete or ambiguous contract?

The parol evidence rule

You're talking to a co-worker at lunch and she mentions she has a box of baby clothes her kids have outgrown that she needs to get rid of. You have a baby on the way, so you offer to pay her $25, and she agrees to bring the box to work the next day and give it to you. Which of the following is true in this situation?

This is an express contract because you defined in words the specific terms of the agreement and consideration to be exchanged.