CONTENTS
1.0 Introduction
2.0 Objectives
- Main Content
- Classification of contract
- Formal Contract
- Simple Contract
- Implied Contract
- Bilateral and Unilateral
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Readings
INTRODUCTION
Contracts are divided into different ways according to the nature of agreement reached by the parties and the nature and terms of the agreement.
OBJECTIVES
To understand the classification of contract
To differentiate the various classes of contract from the other
Appreciate the meaning and effects of the various classifications of contract
Classification Of Contract
A contract, depending on its nature, can be oral, written under seal or even implied from the conduct of the parties.
However, contracts are classified according to the nature and terms of agreement reach by parties.
Formal Contract
A formal contract is a contract made by deed. It is a contract of ancient origin and its validity from the form it is made. It is also known as contract made under seal. It must be made in writing, signed, sealed and delivered. Contracts made by deed do not need to be supported by consideration to be enforced in law. Accordingly, the significant of a contract under seal is that it derives its validity from its form formal contract are usually employed in land agreements, such as conveyance, mortgage and gifts.
Simple Contract
All other contracts than formal contract are classified as simple contracts. They may be in writing or they may be oral. Oral contracts are also called parol contracts. The major factor between a contract under seal or a simple contract is that, in simple contract, only a person who has furnish consideration can bring an action to enforce the contract. The validity of the contract depends on the presence of consideration.
Express and Implied Contract
A contract is said to be express when the terms are clearly state and implied contract, when the terms are not so stated.
However, in an express contract, the extent of the respective obligation of both the offeror and the offeree are clearly stated either orally or in writing. The unique advantage of an express contract, particularly when it is written the parties can always refer to its for interpretation in case of controversy. A good example is where tenders are invited for a construction work, each applicant who responds to the advert will clearly state all the material terms such as the quality of the materials to be used, durability, prices, guarantee, term or mode of payment.
An implied contract is one which the terms are so stated either orally or in writing.
Bilateral and Unilateral Contracts
A bilateral contract consists of exchange of promise for a promise under a bilateral contract, both parties have outstanding obligations which they must fulfill under the buyer is obliged to pay and the seller is obliged to deliver the goods to the buyer.
In a unilateral contract, only one party is obliged from the onset while the other party is completely free whether or not to accept. A unilateral contract can simply be put as where one party is to set a stage for the other party to react or accept. It is a kind of standard contract which goes beyond offer to the whole world, where a reward is offered to anyone who finds an return a lost or stolen article, such as money, load or information leading to the arrest of a criminal. The classical case of Carlill v. Carbolic Smoke Ball Co (1893) I QB. 226. illustrate the good example of a unilateral contract.
CONCLUSION
In this unit we have learnt about the various classification of contract and have also discussed how each contract differ from the other. We should bear in mind while considering the various classification, the importance of each of them.
SUMMARY
There are two basic types of contracts at common law – formal contracts and simple contracts. A formal contract is a contract made by deed. It is also known as a contract under seal. All other contracts are simple contracts, whether or not they are in writing or by word of mouth (parol).
TUTOR-MARKED ASSIGNMENT
- Compare and contrast formal and Simple Contracts
- Explain, with practical example and case law, Unilateral and Bilateral contracts
- On 5 August 2009 Susan took a copy of the advertisement with her and called at her local Bigstore to inspect the Italia sofas. She spoke to Ben, the Sales Manager, and told him that she had decided to purchase the sofas subject to first talking this over with her husband. Ben told Susan that the company only had a limited number of two-seaters so it was agreed that she would leave N5, 000 in return for his agreement to hold the sofas for 48 hours. Ben told her that he would deduct the N5, 000 from the purchase price if Susan went ahead with the purchase within that time period. On 7 August 2009 Susan called at the store to purchase the sofas and spoke to Ben who was very apologetic but explained that his staff had forgotten to reserve the sofas for her. He explained that in any event the two-seaters were “subject to availability” (as stated in various notices around the store), and the company had now run out of them. Ben also said that “…obviously the two-seaters were a free gift and were subject to availability.” He pointed out that the Italia three-seater sofa was still available but the price had now gone back up to N25,
By reference to case law and statute or your own examples where appropriate: Explain the elements of a unilateral offer and how such an offer may be accepted.
REFERENCES/FURTHER READINGS
OLUSEGUN YEROKUN, Modern Law of Contract, 1st ed., Nigerian Revenue Project Publishers (1999)
T.O DADA, General Principles of Law, 3rd ed., T.O. Dada & Co. (2006)
I.E. SAGAY, Nigerian Law of Contract, 2nd ed., Spectrum Law Publishing (2001)
EWAN MACINTYRE, Business Law, 1st ed., Pearson Education Limited (2008)