Bilateral, Unilateral, Unenforceable, Voidable and Void Contracts - Essay Example

Business Law Introduction Contract is an agreement or a promise made usually between two parties where one engaged himself or herself to deliver goods or to render service to the other. When the other party accepted the offer, a contract is deemed formed. The validity and the enforceability of the contract depend on the provisions of the laws that cover the kind of contract that was formed. Generally, a contract is binding and enforceable if it meets the following essential requisites: 1) consent; 2) lawful object; and 3) lawful cause. Consent is presumed to have been validly given if the offer of the other party was accepted by the other contracting party without any condition attached. As a general rule, contracts are binding regardless of their form as long as the essential requisites are present. However, there are those contracts that should be in certain form, for example, should be in writing, to be enforceable. A contracting party who violated the terms or conditions of a contract may be sued for breach of contract in a trial court. Breach of contract may be committed if there is a valid or binding contract or when a contract was already formed. The guilty party is ordered to pay damages capable of pecuniary estimation to the aggrieved party. A person who is in good faith or who is innocent cannot be sued if there is a breach of contract. Likewise, a third party who has no participation or connection in the formation of the contract cannot be sued. Bilateral Contract A contract may be bilateral or unilateral. A bilateral contract is one in which both of the contracting parties formulated and agreed upon the terms and conditions of the contract. Thus, the contracting parties have reciprocal obligation to perform their promises and the contract is already binding and enforceable immediately after a valid consent was given. In a contract of sale for example, the buyer promised to pay the seller of a piano the amount of $1,000 if the seller had delivered the piano in the house of the buyer. If the seller does not deliver the piano, the buyer has no obligation to pay and the seller has no right to demand payment. If the piano was delivered in the buyer's home, the buyer should pay immediately the amount of $1,000. The scenario where a private nursing home entered into an agreement with a pathological laboratory is an example is a bilateral contract. There was an exchange of promise between the nursing home and the laboratory and the performance of the promise by one party will give rise to the performance of the promise of the other party. However, in this scenario, no valid contract was made because a conditional acceptance of the offer was made by the lab which is contrary to the requisites of a valid contract. Being the case, a breach of contract is impossible at this scenario there being no valid contract, therefore, no parties can be sued. Unilateral Contract On the other hand, a unilateral contract is one by which there is an offer (or promise) to enter into a contract made by one party with terms and conditions solely made by him or her. The offer is for everybody and there is no specific person to whom the offer or promise is addressed. A contract will be formed only if a person accepted the offer. Any person who accepted the promise or the offer is bound to follow the terms and conditions imposed by the offeror. The obligation of the offeror to perform his or her promise under a unilateral contract will depend on the performance of the offeree to terms or conditions attached. The offeror is not bound to perform his or her promise if the offeree did not meet the requirements set in the contract. The scenario where a retail store published an ad in the newspaper announcing a 10% discount on all purchases higher than $500 is a unilateral contract. The retail store made the condition that in order for a buyer to avail of the 10% discount, he or she must have a purchase higher than $500. The retail store has no obligation to perform its promise of giving 10% discount if the buyer does not have a purchase higher than $500. The contract is valid only between the retail store who published the ad and the buyers in that retail store, therefore, other retail stores cannot be held liable in case of breach of the discount contract. Unenforceable Contract An unenforceable contract is one that possesses all the requisites of a valid contract. However, it can not be enforced because there are flaws that need to be cured or ratified according to law. Under the Statutes of Fraud for example, a contract of sale of a real property said must be reduced into writing to be enforceable. In the Uniform Commercial Code of the United States, contracts for the sale of goods where the price exceed $500 must be writing to be enforceable. In an unenforceable contract, a valid contract was formed, however, it cannot be enforced because it lacks other requirements set by law. The scenario where Mr. Moore made an oral promise to sell his house to Mr. Hall is an unenforceable contract. The house is a real property and under the Statute of Frauds which is common in the United States of America, the contract of sale of a real property must be reduced into writing in order to be enforceable. But assuming that all the essential requisites of a contract are present, the oral contract is binding. Therefore, a contract of sale was already formed between Mr. Moore and Mr. Long. Thus, when Mr. Moore sold his house to Mr. Hall, he committed a breach of the contract. However, if Mr. Hall bought the house in good faith, he cannot be sued for the breach of the contract since an innocent purchaser of good faith cannot be sued and it is valid defense in the case of breach of contract. Voidable Contract A voidable contract is one which possesses all the essential requisites of a contract. However, one of the parties has the option to terminate the contract because of some defects or s infirmities. Some of the reasons may include: 1) one of the parties is incapable of giving consent, like in the case of a minor; or 2) consent was given because of threat, force, or intimidation by the other party. The remedies for a voidable contract are annulment or ratification of the contract. In annulment of the contract, the parties are bound to return what he or she received and to get back what he or she gave. Aside from annulment of the contract, the guilty party may also be held liable to pay damages if the consent was vitiated by threat, force, or intimidation. In case of ratification of the contract, the infirmities are deemed cured and the contract becomes a valid contract. The scenario where a contract of sale to deliver 100 bottles entered between Jacob and Kevin, a minor, is a voidable contract because Kevin is a minor. In the United State of America, the age of majority is 18 years old. The laws provide that any person who entered a contract below the age of majority is deemed not to have given a valid consent, therefore, the contract is voidable. Kevin being only 15 years old is incapable of giving consent, making the contract of sale with Jacob voidable. Assuming that Kevin misrepresented his age and that induced Jacob to enter the contract with him, Jacob is not liable applying the rule on good faith. Kevin, likewise, is not liable for breach of contract for being a minor even through he misrepresented his age. And under the US torts law, the parents are the ones liable for an unlawful act committed by their minor child. Void Contract A void contract is one which is not binding and does not produce effects at all. It is because the requisites are full of incurable defects or tainted with illegalities of impossibilities. A contract may be void for the following reasons: 1) the object, cause, or purpose is contrary to law, morals, good customs, public policy or order; 2) the object is outside the commerce of man, as in a public bridge; 3) there is impossibility of the service; and 4) the object, cause, or purpose is expressly prohibited or declared void by law. For example, a contract entered to between A and B whereby A ordered B to kill C for the amount of $10,000 is a void contract since the object of the contract which is killing is unlawful. If A did not pay B for after the latter killed C, B cannot go and ask the court to order A to pay B the amount of $10,000. In the scenario where Peter, a government employee working in the Department of Trade, promised Collins a license for his business for a payment of $50,000, is a void contract because it is against public law. Both of the parties may be held liable for bribery, which in the United States is a felony usually committed by a public officer or employee for accepting an amount or consideration in exchange of public service. In this case, the Government of the United States of America cannot be held liable for the acts committed by its agent in the Department of Trade because the Government is not liable for private acts of its employees. Peter is not authorized to issue business licenses therefore he is acting in his private capacity References "Bilateral vs. Unilateral Contracts". ". Retrieved on April 20, 2009 from "Uniform Commercial Code. Retreived on April 22, 2009 from "Void, Voidable and Unenforceable Contracts". Retrieved on April 20, 2009 from Read More