Business Law

TASK 1

DISCUSS DIFFERENT TYPES OF CONTRACTS

“A contract may be defined as an agreement which legally binds the parties”

A contract can be expressed in the following forms:

Written, Verbal and Deeds

WRITTEN

A written contract generally refers to a written document outlining an agreement between two or more parties. All the terms agreed by the parties should be in the contract and be used as reference in the court of law. The purpose of the written contract is generally to ensure that parties fully understand the agreement and are committed to complying in its stipulations. The written contract gives stronger evidence in court than a verbal contract in the sense that if the contract is complex, the written one will be easier to explain than the verbal one *more suited to simple contractual arrangements *verbal cannot override written contracts.

VERBAL

Verbal contract is an agreement entered into voluntarily by two or more parties with the intention of creating a legal obligation, though contracts can be made orally. It is the same as written contract in law and its validity. Some of its constraints/limitations ranges from *parties cannot refer back to examine it with precision *verbal is also weak evidence in court and requires oath.

DEEDS

A contract by deed must be in writing, signed and witnessed. Delivery must take place. Some examples of contracts by deeds are *leases for 3 years or more *mortgages * wills and share transfer. Deeds are not common in the day to day running of the business activities. “A contract by deed is sometimes referred to as a specialty contract”.

(BPP Learning Media, July 2010– The Law of Contract p58)