Types of Contracts
The law recognizes contracts that arise in a number of different ways:
A bilateral contract is the type of agreement most people think of as a traditional contract -- a mutual exchange of promises among the parties. In a bilateral contract, each party may be considered as both making a promise, and being the beneficiary of a promise.
A unilateral contract is one in which the offer requests performance rather than a promise from the person accepting the offer. A unilateral contract is formed when the requested act is complete. A classic example of a unilateral contract is a "reward" advertisement, offering payment of money in exchange for information or the return of something of value.
An express contract is formed by explicit written or spoken language, expressing the agreement and its terms.
An implied contract is formed by behavior of the parties that clearly shows an intent to enter into an agreement, even if no obvious offer and/or acceptance were clearly expressed in words or writing.
Failure to Perform Under the Contract: "Breach"
When disputes arise over contracts, one party may accuse another of failing to perform under the terms of the agreement. Under the law, a party's failure to fulfill an end of the bargain under a contract is known as "breaching" the contract. When a breach of contract happens (or when a breach is alleged), one or both of the parties may wish to have the contract "enforced" on its terms, or may try to recover for any financial harm caused by the alleged breach.
Enforcing Contracts Under the Law
If a dispute over a contract arises and informal attempts at resolution fail, the most common method used to resolve contract disputes and enforce contracts is through lawsuits and the court system. If the amount at issue is below a certain dollar figure (usually $3,000 to $7,500 depending on the state), the parties may be able to use "small claims" court to resolve the issue.
Courts and formal lawsuits are not the only option for people and businesses involved in contract disputes. The parties can agree to have a mediator review a contract dispute, or may agree to binding arbitration of a contract dispute.
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