What Are the Classifications of Contracts? Valet Works

What Are the Classifications of Contracts Valet Works

Contracts offer a way to guarantee payment and ensure that the services provided meet standards. It is important for companies looking to gain 8A certification to understand the different types of contracts and how they are used in government procurement processes.

Contracts can be divided into categories based on various factors, such as their performance, execution, and formation. Understanding the various types of contracts can help ensure that both parties involved in an agreement understand their respective rights and obligations under the contract. Furthermore, both parties can be sure that they are making a valid agreement that will be legally binding and enforceable.

In this article, we’ll discuss four main classifications of contracts that are most commonly used in the government contraction process.

What Is a Contract?

A contract is a legally binding agreement between two or more parties, and as such, it must adhere to certain rules and regulations. To ensure that the contract is enforceable, both parties need to understand their rights and obligations under the terms of the agreement.

  • It should be written down clearly and concisely, so there is no room for misunderstanding between the parties involved.
  • The document should also include details such as any payment that may take place, dates for completion of the task, and how each party will be expected to

Classification of Contract by Its Formation, Performance, and Execution

Contracts may be classified according to their formation, performance, execution, and other categories.

Classification of Contract by Its Formation

The formation of a contract refers to the negotiation process by which a binding agreement is created between two or more parties. The formation of a contract can be classified into two types: Express Contract, Implied Contract, and Quasi Contract.

1. Express Contract

An express contract is a legally binding agreement between two or more parties that is created when the parties explicitly state their intent to be bound by the terms of the contract, either orally or in writing. Express contracts are often used in business transactions and involve a clear agreement between all parties involved.

2. Implied Contract

An implied contract is an agreement that is formed without the exchange of any explicit verbal or written communication between two parties. This type of contract is usually created through the behavior of the parties involved and may be inferred from their actions. Implied contracts are typically used when one party has provided a service or goods with the reasonable expectation of receiving compensation in return.

3. Quasi Contract

A quasi contract is an agreement between two or more parties that is not actually legally binding. This type of contract is usually created by a court of law in order to prevent one party from unfairly benefiting from another’s actions.

For Example:

if one party provides goods or services to another without any expectation of payment, the court may create a quasi-contract in order to force the receiving party to pay for what they have received.

Classification of Contract by Its Performance

Contract performance refers to the obligations and responsibilities of each involved party, which must be fulfilled for the contract to be valid. Contract performance can be divided into two categories: Unilateral contracts and bilateral contracts.

1. Unilateral Contracts

Unilateral contracts are agreements in which one party is obliged to perform a certain action, and the other party is not obligated to do anything.

For Example:

An offeror might offer a reward for someone who can find a lost item, but the person receiving the reward is not obligated to perform any type of service in return.

2. Bilateral Contracts

Bilateral contracts are agreements in which both parties must fulfill their obligations in order for the contract to be considered valid.

For Example:

An employer and employee enter into a contract that specifies wages and benefits to be provided by the employer as well as duties and responsibilities required of the employee. Both sides must fulfill their obligations for the contract to be valid.

Classification of Contract by Its Execution

The execution of a contract refers to the process by which the parties involved sign and accept the terms of the agreement. The two types of execution are Executed contracts and Executory contracts.

1. Executed Contracts

Executed contracts are agreements that have been fully signed and accepted by both parties involved. Once a contract has been executed, the terms of the agreement become legally binding, and any violations of the agreement can be met with legal repercussions.

2. Executory Contracts

An executory contract is a contractual obligation in which both parties must do or perform something. This means that while the terms of the agreement may have been agreed upon, neither party has yet fulfilled its obligations under the contract. Until all the terms of the agreement are accepted and signed by both parties, it is not considered legally binding.

Looking for 8(a) Certified Contractors? Contact Valet Works

Valet Works is the perfect choice for all your general contracting needs. Our 8A certification allows us to bring our clients a wealth of knowledge and expertise, with access to the top tier of contractors in the industry. Our team of experienced professionals follows all standards and regulations, so you can be assured that your project will be completed on time and on budget. Call us today for a free consultation to learn how we can help bring your vision to life.

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