What is CONTRACT? Definition of CONTRACT in Black's Law Dictionary - Legal dictionary - Glossary of legal terms.
A promissory agreement between two or more persons that creates, modifies, or destroys a legal relation. Buffalo Pressed Steel Co. v. Kirwan, 138 Md. 60, 113 A. 628, 630; Mexican Petroleum Corporation of Louisiana v. North German Lloyd, D.C.La., 17 F.2d 113, 114.
An agreement, upon sufficient consideration, to do or not to do a particular thing. 2 Bl.Comm. 442; 2 Kent, Comm. 449. Justice v. Lang, 42 N.Y. 496, 1 Am.Rep. 576; Rabon v. State Finance Corporation, 203 S.C. 183, 26 S.E.2d 501, 502.
An agreement between two or more parties, preliminary Step in making of which is offer by one and acceptance by other, in which minds of parties meet and concur in understanding of terms. Lee v. Travelers' Ins. Co. of Hartford, Conn., 173 S.C. 185, 175 S.E. 429.
A deliberate engagement between competent parties, upon a legal consideration, to do, or abstain from doing, some act. Wharton; Smith v. Thornhill, Tex.Com.App. 25 S.W.2d 597, 599.
It is agreement creating obligation, in which there must be competent parties, subject-matter, legal consideration, mutuality of agreement, and mutuality of obligation, and agreement must not be so vague or uncertain that terms are not ascertainable. H. Liebes & Co. v. Klengenberg, C. C.A.Cal., 23 F.2d 611, 612.
A contract or agreement is either where a promise is made on one side and assented to on the other; or where two or more persons enter into engagement with each other by a promise on either side. 2 Steph.Comm. 54.
The writing which contains the agreement of parties, with the terms and conditions, and which serves as a proof of the obligation.
Certain and Hazardous
Certain contracts are those in which the thing to be done is supposed to depend on the will of the party, or when, in the usual course of events, it must happen in the manner stipulated. Hazardous contracts are those in which the performance of that which is one of its objects depends on an uncertain event. Civ.Code La. 1776.
Classification
Contracts may be classified on several different methods, according to the element in them which is brought into prominence. The usual classifications are as follows:
Commutative and Independent
Commutative contracts are those in which what is done, given, or promised by one party is considered as an equivalent to or in consideration of what is done, given, or promised by the other. Civ.Code La. 1768; Ridings v. Johnson, 9 Sup.Ct. 72, 128 U.S. 212, 32 L.Ed. 401. Independent contracts are those in which the mutual acts or promises have no relation to each other, either as equivalents or as considerations. Civ.Code La. 1769.
Conditional Contract
An executory contract the performance of which depends upon a condition. It is not simply an executory contract, since the latter may be an absolute agreement to do or not to do something, but it is a contract whose very existence and performance depend upon a contingency. Railroad Co. v. Jones, 2 Cold. (Tenn.) 584; French v. Osmer, 67 Vt. 427, 32 A. 254.
Consensual and Real
Consensual contracts are such as are founded upon and completed by the mere agreement of the contracting parties, without atry external formality or symbolic act to fix the obligation. Real contracts are those in which it is necessary that there should be something more than mere consent, such as a loan of money, deposit or pledge, which, from their nature, require a delivery of the thing, (res.) Inst. 3, 14, 2; Id. 3, 15; Halifax, Civil Law, b. 2, c. 15, No. 1. In the common law a contract respecting real property (such as a lease of land for years) is, called a "real" contract. 3 Coke, 22a.
Constructive Contract
Constructive contracts are such as arise when the law prescribes the rights and liabilities of persons who have not in reality entered into a contract at all, but between whom circumstances make it just that one should have a right, and the other be subject to a liability, similar to the rights and liabilities in cases of express contract. Donovan v. Kansas City, 352 Mo. 430, 175 S.W.2d 874, 884.
Divisible and Indivisible
The effect of the breach of a contract depends in a large degree upon whether it is to be regarded as indivisible or divisible; i. e. whether it forms a whole, the performance of every part of which is a condition precedent to bind the other party, or is composed of several independent parts, the performance of any one of which will bind the other party pro tanto. The only test is whether the whole quantity of the things concerned, or the sum of the acts to be done, is of the essence of the contract. It depends, therefore, in the last resort, simply upon the intention of the parties. Integrity Flooring v. Zandon Corporation, 130 N.J.L. 244, 32 A.2d 507, 509.
When a consideration is entire and indivisible, and it is against law, the contract is void in toto. Frazier v. Thompson, 2 Watts & S. (Pa.) 235. When the consideration is divisible, and part of it is illegal, the contract is void only pro tanto. Harr.Contr. 132; Gelpcke v. Dubuque, 1 Wall. 220, 17 L.Ed. 530.
Entire and Severable
An entire contract is one the consideration of which is entire on both sides. The entire fulfillment of the promise by either is a condition precedent to the fulfillment of any part of the promise by the other. Whenever, therefore, there is a contract to pay the gross sum for a certain and definite consideration, the contract is entire. A severable contract is one the consideration of which is, by its terms, susceptible of apportionment on either side, so as to correspond to the unascertained consideration on the other side, as a contract to pay a person the worth of his services so long as he will do certain work; or to give a certain price for every bushel of so much corn as corresponds to a sample. Orenstein v. Kahn, 13 Del.Ch. 376, 119 A. 444, 446; Integrity Flooring v. Zandon Corporation, 130 N.J.L. 244, 32 A.2d 507, 509; Ruby v. United Sugar Cos., 56 Ariz. 535, 109 P.2d 845, 848.
Where a contract consists of many parts; which may be considered as parts of one whole, the contract is entire. When the parts may be considered as so many distinct contracts, entered into at one time, and expressed in the same instrument, but not thereby made one contract, the contract is a separable contract. But, if the consideration of the contract is single and entire, the contract must be held to be entire, although the subject of the contract may consist of several distinct and wholly independent items. 2 Pars.Cont. 517.
Executed and Executory
Contracts are also distinguished into executed and executory; executed, where nothing remains to be done by either party, and where the transaction is completed at the moment that the arrangement is made, as where an article is sold and delivered, and payment therefor is made on the spot; executory, where some future act is to be done, as where an agreement is made to build a house in six months, or to do an act on or before some future day, or to lend money upon a certain interest, payable at a future time. Farrington v. Tennessee, 95 U.S. 683, 24 L.Ed. 558; Fox v. Kitton, 19 Ill. 532; Mather v. Mather, 25 Ca1.2d 582, 154 P.2d 684, 686.
But executed contracts are not properly contracts at all, except reminiscently. The term denotes rights in property which have been acquired by means of contract; but the parties are no longer bound by a contractual tie. Mettel v. Gales, 12 S.D. 632, 82 N.W. 181.
Express and Implied
An express contract is an actual agreement of the parties, the terms of which are openly uttered or declared at the time of making it, being stated in distinct and explicit language, either orally or in writing. 2 Bl.Comm. 443; 2 Kent, Comm. 450; Linn v. Ross, 10 Ohio 414, 36 Am.Dec. 95; A. J. Yawger & Co. v. Joseph, 184 Ind. 228; 108 N.E. 774, 775; In re Pierce, Butler & Pierce Mfg. Co., D.C.N.Y., 231 F. 312, 318.
An implied contract is one not created or evidenced by the explicit agreement of the parties, but inferred by the law, as a matter of reason and justice from their acts or conduct, the circumstances surrounding the transaction making it a reasonable, or even a necessary, assumption that a contract existed between them by tacit understanding. Miller's Appeal, 100 Pa. 568, 45 Am.Rep. 394; Landon v. Kansas City Gas Co., C.C.A.Kan., 10 F.2d 263, 266; Caldwell v. Missouri State Life Ins. Co., 230 S.W. 566, 568, 148 Ark. 474; Cameron, to Use of Cameron, v. Eynon, 332 Pa. 529, 3 A.2d 423, 424; American La France Fire Engine Co., to Use of American La France & Foamite Industries, v. Borough of Shenandoah, C.C.A.Pa., 115 F.2d 806, 867.
Implied contracts are sometimes subdivided into those "implied in fact" and those "implied in law," the former being covered by the definition just given, while the latter are obligations imposed upon a person by the law, not in pursuance of his intention and agreement, either expressed or implied, but even against his will and design, because the circumstances between the parties are such as to ren. der it just that the one should have a right, and the other a corresponding liability, similar to those which would arise from a contract between them. This kind of obligation therefore rests on the principle that whatsoever it is certain a man ought to do that the law will suppose him to have promised to do. And hence it is said that, while the liability of a party to an express contract arises directly from the contract, it is just the reverse in the case of a contract "implied in law," the contract there being implied or arising from the liability. Bliss v. Hoyt, 70 Vt. 534, 41 A. 1026; Kellum v. Browning's Adm'r, 231 Ky. 308, 21 S.W.2d 459, 465. But obligations of this kind are not properly contracts at all, and should not be so denominated. There can be no true contract without a mutual and concurrent intention of the parties. Such obligations are more properly described as "quasi contracts." Union Life Ins. Co. v. Glasscock, 270 Ky. 750, 110 S.W.2d 681, 686, 114 L.R. 373.
Fair and Reasonable Contract
See Fair and Reasonable Contract.
Gratuitous and Onerous
Gratuitous contracts are those of which the object is the benefit of the person with whom it is made, without any profit or advantage received or promised as a consideration for it. It is not, how ever, the less gratuitous if it proceed either from gratitude for a benefit before received or from the hope of receiving one thereafter, although such benefit be of a pecuniary nature. Onerous contracts are those in which something is given or promised as a consideration for the engagement or gift, or some service, interest, or condition is imposed on what is given or promised, although unequal to it in value. Civ.Code La.1773, 1774; Penitentiary Co. v. Nelms, 65 Ga. 505, 38 Am.Rep. 793. A gratuitous contract is sometimes called a contract of beneficence. Howe, Studies in the Civil Law 107.
Joint and Several
A joint contract is one made by two or more promisors, who are jointly bound to fulfill its obligations, or made to two or more promisees, who are jointly entitled to require performance of the same. A contract may be "several" as to any one of several promisors or promisees, if he has a legal right (either from the terms of the agreement or the nature of the undertaking) to enforce his individual interest separately from the other parties. Jens-Marie Oil Co. v. Rixse, 72 Okl. 93, 178 P. 658. Generally all contracts are joint where the interest of the parties for whose benefit they are created is joint, and separate where that interest is separate. Shurtleff v. Udall, 97 Vt. 156, 122 A. 465, 468.
Mutual Interest, Mixed, etc.
Contracts of "mutual interest" are such as are entered into for the reciprocal interest and utility of each of the parties; as sales, exchange, partnership, and the like. "Mixed" contracts are those by which one of the parties confers a benefit on the other, receiving something of inferior value in return, such as a donation subject to a charge. Contracts "of beneficence" are those by which only one of the contracting parties is benefited; as loans, deposit and mandate. Poth.Obl. 1, 1, 1, 2.
Parol
A contract not entirely in writing. Louisville, N. A. and C. Ry. Co. v. Reynolds, 118 Ind. 170, 173, 20 N.E. 711.
A written contract, which leaves some essential term thereof to be shown by parol, is only "parol contract" not enforceable under statute of fraud. Sheldmyer v. Bias, 112 Ind.App. 522, 45 N.E.2d 347, 349.
Personal Contract
A contract relating to personal property, or one which so far involves the element of personal knowledge or skill or personal confidence that it can be performed only by the person with whom made, and therefore is not binding on his executor. See Janin v. Browne, 59 Cal. 44; Lucas v. J. H. Gross Motor Car Co., 27 Ohio App. 183, 161 N.E. 362, 363.
Pre-contract
An obligation growing out of a contract or contractual relation, of such a nature that it debars the party from legally entering into a similar contract at a later time with any other person; particularly applied to marriage.
Principal and Accessory
A principal contract is one entered into by both parties on their own account or in the several qualities they assume. It is one which stands by itself, justifies its own existence, and is not subordinate or auxiliary to any other. Accessory contracts are those made for assuring the performance of a prior contract, either by the same parties or by others, such as suretyship, mortgage, and pledge. Civ.Code La. art. 1771.
Quasi Contracts
In the civil law. A contractual relation arising out of transactions between the parties which give them mutual rights and obligations, but do not involve a specific and express convention or agreement between them. Keener, Quasi Contr. 1; Elbert County v. Brown, 16 Ga.App. 834, 86 S.E. 651, 665. The lawful and purely voluntary acts of a man, from which there results any obligation whatever to a third person, and some- times a reciprocal obligation between the parties. Civ. Code La. art. 2293.
Persons who have not contracted with each other are often regarded by the Roman law, under a certain state of facts, as if they had actually concluded a convention between themselves. The legal relation which then takes place between these persons, which has always a similarity to a contract obligation, is therefore termed "obligatio quasi ex contractu." Such a relation arises from the conducting of affairs without authority, (negotiorum gestio,) from the payment of what was not due, (solutio indebiti,) from tutorship and curatorship, and from taking possession of an inheritance. Mackeld.Rom.Law § 491.
Legal fiction invented by common law courts to permit recovery by contractual remedy of assumpsit in cases where, in fact, there is no contract, but where circumstances are such that justice warrants a recovery as though there had been a promise. Clark v. Peoples Savings and Loan Ass'n of De Kalb County, 221 Ind. 168, 46 N.E.2d 681, 682, 144 A.L.R. 1495. It is not based on intention or consent of the parties, but Is founded on considerations of justice and equity, and on doctrine of unjust enrichment. Bruggeman v. Independent School Dist., No. 4, Union Tp., Mitchell County, 227 Iowa 661, 289 N.W. 5, 8, 11.
It is not in fact a contract, but an obligation which the law creates in absence of any agreement, when and because the acts of the parties or others have placed in the possession of one person money, or its equivalent, under such circumstances that in equity and good conscience he ought not to retain it. Grossbier v. Chicago, St. P., M. & 0. Ry. Co., 173 Wis. 503, 181 N.W. 746, 748; It is an implication of law. First Nat. Bank v. Matlock, 99 Okl. 150, 226 P. 328, 331, 36 A.L.R. 1088; Caldwell v. Missouri State Life Ins. Co., 148 Ark. 474, 230 S.W. 566, 568.
It is what was formerly known as the contract implied in law; it has no reference to the intentions or expressions of the parties. The obligation is imposed despite, and frequently in frustration of their intention. Town of Balkan v. Village of Buhl, 158 Minn. 271, 197 N.W. 266, 35 L. R. 470.
Record, Specialty, Simple
Contracts of record are such as are declared and adjudicated by courts of competent jurisdiction, or entered on their records, including judgments, recognizances, and statutes staple. Hardeman v. Downer, 39 Ga. 425. These are not properly speaking contracts at all, though they may be enforced by action like contracts. Specialties, or special contracts, are contracts under seal, such as deeds and bonds. Ludwig v. Bungart, 26 Misc. Rep. 247, 56 N.Y.S. 51. All others are included in the description "simple" contracts; that is, a simple contract is one that is not a contract of record and not under seal; it may be either written or oral, in either case, it is called a "parol" contract, the distinguishing feature being the lack of a seal. Stackpole v. Arnold, 11 Mass. 30, 6 Am. Dec. 150; 4 B. & Ald. 588; 2 Bla.Comm. 472.
Special Contract
A contract under seal; a specialty; as distinguished from one merely oral or in writing not sealed. But in common usage this term is often used to denote an express or explicit contract, one which clearly defines and settles the reciprocal rights and obligations of the parties, as distinguished from one which must be made out, and its terms ascertained, by the inference of the law from the nature and circumstances of the transaction.
A special contract may rest in parol, and does not mean a contract by specialty; it is defined as one with peculiar provisions not found in the ordinary contracts relating to the same subject-matter. Midland Roofing Mfg. Co. v. Pickens, 96 S.C. 286, 80 S.E. 484, 485.
Subcontract
A contract subordinate to another contract, made or intended to be made between the contracting parties, on one part, or some of them, and a stranger. 1 H.B1. 37, 45. One made under a prior contract. Mobley v. Leeper Bros. Lumber Co., 89 Okl. 95, 214 P. 174, 175.
Where 'a person has contracted for the performance of certain work (e. g., to build a house,) and he in turn engages a third party to perform the whole or a part of that which is included in the original contract, (e. g., to do the carpenter work,) his agreement with such third person is called a "subcontract," and such person is called a "sub-contractor." Central Trust Co. v. Railroad Co., C.C.Ky., 54 F. 723 Lester v. Houston, 101 N.C. 605, 8 S.E. 366. The term "subcontractor" means one who has contracted with the original contractor for the performance of all or a part of the work or services which such contractor has himself contracted to perform. Republic Supply Co. v. Allen, Tex.Civ.App., 262 S.W. 113, 114.
Unconscionable Contract
One which no sensible man not under delusion, duress, or in distress would make, and such as no honest and fair man would accept. Franklin Fire Ins. Co. v. Noll, 115 Ind.App. 289, 58 N.E.2d 947, 949, 950.
Unilateral and Bilateral
A unilateral contract is one in which one party makes an express engagement or undertakes a performance, without receiving in return any express engagement or promise of performance from the other. Bilateral (or reciprocal) contracts are those by which the parties expressly enter into mutual engagements, such as sale or hire. Civ. Code La. art. 1765; Poth. Obl. 1, 1, 1, 2; Kling Bros. Engineering Works v. Whiting Corporation, 320 Ill.App. 630, 51 N.E.2d 1004, 1007. When the party to whom an engagement is made makes no express agreement on his part, the contract is called unilateral, even in cases where the law attaches certain obligations to his acceptance. La. Civ. Code, art. 1765. A contract is also said to be "unilateral" when there is a promise on one side only, the consideration on the other side being executed. McMahan v. McMahon, 122 S.C. 336, 115 S.E. 293, 294, 26 A.L.R. 1295.
Usurious Contract
See that title.
Written Contract
A "written contract" is one which in all its terms is in writing. Fey v. Loose-Wiles Biscuit Co., 147 Kan. 31, 75 P.2d 810, 813; and instrument signed by one party is orally accepted by other, Reeves Furniture Co. v. Simms, Tex.Civ.App., 59 S.W.2d 262, 263.
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