What Are the 2 Types of Formal Contract?

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Types of Contracts:

  • Formal Contracts: Written agreements that are legally enforceable.
  • Informal Contracts: Rely on spoken agreements and actions demonstrating intent.

Contract Groups:

  • Fixed Price Contracts
  • Cost-Reimbursement Contracts

Examples of Legal Contracts:

  • Quasi-Contracts
  • Unilateral Contracts
  • Void Contracts
  • Unenforceable Contracts

Key Elements of a Valid Contract:

  • Agreement and consideration
  • Offer, terms, payment details, and performance

Joint and Several Contracts:

  • Binds parties together and individually for payment obligations

Cost-Reimbursable Contracts:

  • Contractor receives allowable costs plus an agreed-upon amount

Service Contracts:

  • Describes a company’s terms for clients, including job duration, salary, and termination grounds

Benefits of Contracts:

  • Reduce risk in transactions by outlining rights and responsibilities
  • Provide legal protection and enable business exchanges
  • Ensure clarity and transparency to prevent misinterpretation

Formal Contract Explained:

  • A legally enforceable agreement between two parties with substantive terms and obligations specified in writing

Contract Types Summary:

  • Formal contracts are made by deed, also known as contracts under seal, while simple contracts do not require formalities. Express contracts have all terms clearly stated, whereas implied contracts do not.

Bilateral Contracts:

  • Involve mutual promises, such as purchases, ensuring both parties fulfill their obligations

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