Contract classification refers to the categorization of contracts based on their attributes. There are different types of contracts, and each has distinctive characteristics that set it apart from others. Understanding contract classification is crucial because it can impact the legal consequences of a contract and the rights and obligations of the parties involved.
There are four primary classifications of contracts: express, implied, executed, and executory.
Express contracts are the type of contracts that are formed explicitly through written or oral communication between the parties involved. An express contract is formed when two or more parties agree on specific terms and conditions, and they all sign the agreement. The express contract is also referred to as a “formal contract,” and it is known for its clarity and certainty. The terms of the contract are explicitly stated, and there is little room for interpretation or ambiguity.
Implied contracts, on the other hand, do not have explicit terms and conditions. Instead, they are formed through the conduct of the parties involved. In an implied contract, the actions of the parties involved indicate that a contract exists, even though it was not explicitly stated. For instance, when you order a product from an online store, you are entering into an implied contract with the seller, who will deliver the product to you.
An executed contract is a type of contract where the parties involved have fulfilled all the terms and conditions outlined in the agreement. In other words, they have completed their obligations under the contract. The execution of the contract signifies the end of the agreement, and there are no further obligations or rights to be fulfilled.
Unlike executed contracts, executory contracts are contracts where one or more parties have yet to fulfill their obligations under the agreement. The obligations and rights of the parties are yet to be executed, and until they are, the contract remains executory. For instance, when a business signs a contract with a supplier to buy raw materials on a monthly basis, the contract remains executory until the supplier delivers the materials and the business pays for them.
In conclusion, understanding the classification of contracts is critical, as it can affect the legal implications of the agreement. Contracts can be classified as express, implied, executed, or executory, each with its unique features and requirements. By knowing and correctly classifying the type of contract you are entering into, you can ensure that your rights and obligations are protected.