A contract is an agreement for valuable consideration to act or refrain from acting. The two or more competent parties can act on the contract in the future. It is different from a promise because the promise is a declaration without an agreement. For a contract to be valid, all the parties must consent. This is known as genuineness of assent. This is supported by the objective theory of consent. It is subject to the understanding of a reasonable person who places themselves in a similar position. A valid contract must have an agreement with an offer and terms. It must also have consideration showing the value of the deal. The parties must have contractual capacity or be legally able to contract. The details must be legal and presented in the form accepted by law.
A bilateral contract contains both the offerer's promise and the offerees's counter promise. A unilateral contract only has the offerer's promise that is accepted by the offeree. It can not be revoked once the offeree fulfills his end. A formal contract is enforceable only when a special form is filled.eg, a contract under seal. An informal contract is valid even without the method of formation or special form. An express contract has its terms stated explicitly. An implied in fact contract requires some exchange of property or service where payment was expected. An opportunity to reject the transaction must also be demonstrated.
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An executed contract is one where all the involved parties have fulfilled their obligation while an executors party has not been fulfilled by one of the parties. A voidable contract is one which one of the parties may annul based on objections. An unenforceable one is invalidated by the law. A void contract has no binding effect. A quasi contract is imposed on the parties by the law to protect the interests of both parties. Contracts are interpreted depending on the parties intentions. The actions, words and circumstances surrounding the contract are used in interpretations. Courts enforce a clearly worded and conforming contract under the plain meaning rule. Extrinsic evidence is used to interpret any other kind of document.
