Agreements and contracts are essential documents that govern the relationships between individuals and businesses. However, not all agreements and contracts are created equal. They can be classified on the basis of validity formation and performance.
Validity formation refers to the process of creating a legally binding agreement or contract. There are four types of validity formation – formal, informal, express, and implied.
Formal agreements are usually in writing and signed by the parties involved. These are typically used for agreements of high value, such as real estate transactions or major business deals.
Informal agreements, on the other hand, are not in writing and are based on trust between the parties. These are often used in personal relationships, such as between friends or family members.
Express agreements are formed when the parties involved explicitly state their intentions and terms of the agreement. This can be done orally or in writing.
Implied agreements are created when the parties involved do not explicitly state their intentions but their actions imply that they are agreeing to something. For example, a customer who repeatedly goes to the same coffee shop and orders the same drink may have an implied agreement with the shop owner to continue providing that drink.
Performance, on the other hand, refers to the fulfillment of the terms of the agreement or contract. There are two types of performance – executed and executory.
Executed contracts are those where the terms have already been fulfilled by both parties. For example, if you buy a car from a dealership and pay for it in full, the contract has been executed.
Executory contracts are those where the terms are yet to be fulfilled. For example, if you hire a contractor to build a house, the contract is executory until the house is built and the terms of the contract are fulfilled.
In conclusion, agreements and contracts can be classified on the basis of validity formation and performance. Understanding these classifications is essential for ensuring that agreements and contracts are legally binding and enforceable. As a professional, it is important to remember these classifications when working on legal documents to ensure that they are accurate and properly reflect the intended agreement or contract.