Business Law 103
Bilateral Contract: a reciprocal arrangement between two parties where each
promises to perform an act in exchange for the other party's act. Each party is an (a
person who is bound to another) to its own promise, and an obligee (a person to whom
another is obligated or bound) on the other party's promise. An example of a bilateral
contract would be a contract in which a plumber agrees to fix and replace a broken pipe
in someone’s house in exchange for a fixed amount of money.
Unilateral Contract: legally enforceable promise, between legally competent parties, to
do or refrain from doing a specified, legal act or acts. In a unilateral contract, one party
pays the other party to perform a certain duty. For example, if an individual places an
advertisement in the local newspaper to provide an award in the event a missing item is
returned, that individual is obligated to pay the award if the item is indeed returned.
Express Contract: An exchange of promises in which the terms by which the parties
agree to be bound are declared either orally or in writing, or a combination of both, at
the time it is made. An example would be If I want to purchase my first home and I
found the perfect house. The contract I would enter into would be an expressed contract
because the elements are specifically stated, including offer, acceptance and
Implied Contract: an agreement created by actions of the parties involved, but it is not
written or spoken. This is a contract assumed to have been drawn. In this case, there is
no written record nor any actual verbal agreement. A form of an implied contract is an
implied warranty provided automatically by law.
Executed Contract: a legal document that has been signed off by the people
necessary for it to become effective. The contract is often made between two or more
people, but it can also be between a person and an entity, or two or more entities. An
example would be a contract for purchase of a major appliance. This contract is entered
into, and the appliance is immediately delivered.
Executory Contract: A contract made by two parties in which the terms are set to be
fulfilled at a later date. The contract stipulates that both sides still have duties to perform
before it becomes fully executed. The contract is often in place between a debtor or