AIC 301 Glossary & Concepts
Contract
a legally enforceable agreement between two or more parties
Promisor
The party/person making the promise
Promisee
The party/person to whom a promise is made.
Privity of Contract
The relationship that exists between the parties of a contract (promisor and the promisee)
Third Party Beneficiary
A person/party that will benefit from the contract but is not a party to the contract.
Offeror
The party making the offer/promise to give something in return for a promise or an act by
another person.
Offeree
The party to a contract who makes a promise or acts in return for something offered by another
party.
Types of Contracts
1. Bilateral & Unilateral Contracts
2. Executed & Executory Contracts
3. Express & Implied Contracts
4. Voidable & Void Contracts
Bilateral Contract
A contract in which each party promises a performance. The most common type of contract.
,Unilateral Contract
A contract in which one party makes a promise or undertakes the requested performance.
Example: Insurance will pay if an accident occurs (if premiums are paid). The insured does not
have to take advantage of this offer but if they chose to pay the premium that constitutes acting
on the contract.
Executed Contract
A contract that has been completely performed by both parties. It requires nothing more.
Executory Contract
A contract that has not yet been fully executed. Example: Fire Insurance: the insurers promise
to provide coverage is conditional on the occurrence of a fire.
Express Contract
The terms are clearly stated.
Implied Contract
Not an actual contract (quasi contract). The terms and conditions are indicated by the actions of
the parties to the contract and surrounding circumstance.
There are 2 types -implied in fact & implied in law
Implied in Fact Contract
It is not expressed but the parties presumably intended, either by tacit understanding or by the
assumption that it existed.
Example: A landscaper works every Wednesday and gets paid the same amount each
Thursday for months. This is an implied in fact contract.
Implied in Law Contract
Not an actual contract. This could be an obligation that does not arise from the parties' apparent
intentions but from the court's notion of justice and equity in cases.
Example: Someone's car breaks down in a parking lot and a mechanic happens to be there. He
spends hours fixing the car for the person and later sends a bill for his service.
, Voidable Contract
A contract that one of the parties can reject (avoid) based on circumstance surrounding its
execution.
Void Contract
An agreement that despite the parties intention never reaches contract status and is therefore
not legally enforceable or binding.
What are the elements of a legally binding contract?
1. Agreement
2. Capacity
3. Mutal Assent
4. Consideration
5. Legal Purpose
6. In the form by law
What are the similarities and differences between bilateral and unilateral?
With bilateral, each party promises to perform an act for the act of the other party.
With a Unilateral contract one party promises to pay for an act of the other party. No act = no
payment
Elements that might render a contract unenforceable
-Fraud
-Mistake
-Duress
-Undue Influence
-Innocent Misrepresentation
-Statute of Frauds
-Parole Evidence Rule
Contract
a legally enforceable agreement between two or more parties
Promisor
The party/person making the promise
Promisee
The party/person to whom a promise is made.
Privity of Contract
The relationship that exists between the parties of a contract (promisor and the promisee)
Third Party Beneficiary
A person/party that will benefit from the contract but is not a party to the contract.
Offeror
The party making the offer/promise to give something in return for a promise or an act by
another person.
Offeree
The party to a contract who makes a promise or acts in return for something offered by another
party.
Types of Contracts
1. Bilateral & Unilateral Contracts
2. Executed & Executory Contracts
3. Express & Implied Contracts
4. Voidable & Void Contracts
Bilateral Contract
A contract in which each party promises a performance. The most common type of contract.
,Unilateral Contract
A contract in which one party makes a promise or undertakes the requested performance.
Example: Insurance will pay if an accident occurs (if premiums are paid). The insured does not
have to take advantage of this offer but if they chose to pay the premium that constitutes acting
on the contract.
Executed Contract
A contract that has been completely performed by both parties. It requires nothing more.
Executory Contract
A contract that has not yet been fully executed. Example: Fire Insurance: the insurers promise
to provide coverage is conditional on the occurrence of a fire.
Express Contract
The terms are clearly stated.
Implied Contract
Not an actual contract (quasi contract). The terms and conditions are indicated by the actions of
the parties to the contract and surrounding circumstance.
There are 2 types -implied in fact & implied in law
Implied in Fact Contract
It is not expressed but the parties presumably intended, either by tacit understanding or by the
assumption that it existed.
Example: A landscaper works every Wednesday and gets paid the same amount each
Thursday for months. This is an implied in fact contract.
Implied in Law Contract
Not an actual contract. This could be an obligation that does not arise from the parties' apparent
intentions but from the court's notion of justice and equity in cases.
Example: Someone's car breaks down in a parking lot and a mechanic happens to be there. He
spends hours fixing the car for the person and later sends a bill for his service.
, Voidable Contract
A contract that one of the parties can reject (avoid) based on circumstance surrounding its
execution.
Void Contract
An agreement that despite the parties intention never reaches contract status and is therefore
not legally enforceable or binding.
What are the elements of a legally binding contract?
1. Agreement
2. Capacity
3. Mutal Assent
4. Consideration
5. Legal Purpose
6. In the form by law
What are the similarities and differences between bilateral and unilateral?
With bilateral, each party promises to perform an act for the act of the other party.
With a Unilateral contract one party promises to pay for an act of the other party. No act = no
payment
Elements that might render a contract unenforceable
-Fraud
-Mistake
-Duress
-Undue Influence
-Innocent Misrepresentation
-Statute of Frauds
-Parole Evidence Rule
