Types and Characteristics of Agreements

Study Notes

Types of Agreements

Agreements, in a general sense, are legally binding understandings between two or more parties, outlining mutual obligations and responsibilities.

Characteristics of a Valid Agreement

Offer and Acceptance: A clear and definite offer by one party, and a clear and unequivocal acceptance by the other. There must be a meeting of the minds (mutual understanding).
Intention to Create Legal Relations: Both parties must intend that the agreement be legally enforceable.
Consideration: Each party must exchange something of value (e.g., money, goods, services). This exchange is the price for the promise.
Capacity: Both parties must have the legal capacity to enter into a contract; for example, they must be of legal age and sound mind.
Legality of Purpose: The agreement itself must be legal and not violate any laws or public policy.

Classification of Agreements

Bilateral Agreements: These are agreements where each party makes a promise to the other. Each party is both a promisor and a promisee. For example, a contract to buy and sell goods. Both parties have an obligation to perform their promised actions.
Unilateral Agreements: These are agreements where one party promises something in exchange for an action by the other party. The other party does not make a promise, but rather performs an act. Only one party makes an explicit promise. For example, a reward offer for finding a lost item. The finder is not required to promise to find the lost item, but performs the act of finding it.
Express Agreements: These are agreements where the terms are explicitly stated, either orally or in writing. Clear and unambiguous language is used to outline the agreement.
Implied Agreements: These agreements are derived from the conduct of the parties, rather than explicit statements. The actions of the parties indicate a mutual understanding and agreement, even without written or oral contracts.

Special Types of Agreements

Simple Contract: A contract made without any formality. This is the most common type of contract. Proof of agreement can be inferred from evidence.
Formal Contract: These contracts are made in a specific, formal way, often requiring a written document with specific legal signatures or seals.
Contracts of Record: These are contracts that are recorded in court and, as such, are legally binding. They are usually judicially established.
Executory Contract: One or both parties have not yet fully performed the promises outlined in the agreement. The contract is pending.
Executed Contract: All parties have fully performed their promises outlined in the agreement. The contract is complete.
Valid Contract: This is a contract that meets all the required legal elements mentioned above (offer, acceptance, consideration, capacity, legality).
Void Contract: A contract that, from its inception, has no legal force or effect and is not enforceable by law. Often if one or more of the valid contract elements is absent.
Voidable Contract: A contract that is initially valid but may be subsequently voided by one or both parties. Examples of voidable contracts might include cases of undue influence or mistake, misrepresentation, fraud, or duress.
Unenforceable Contract: A contract that is valid in its formation but cannot be enforced due to a legal defense, such as the statute of limitations, or due to a lack of written proof.

Agreement vs. Contract

While these terms are often used interchangeably, a contract is a specific type of agreement that is legally enforceable. All contracts are agreements, but not all agreements are contracts.

Description

This quiz focuses on the essential aspects of agreements, including their definitions, characteristics, and classifications. Understand the components that make an agreement valid, such as offer, acceptance, consideration, and legality. Test your knowledge on both bilateral and unilateral agreements and their implications.