NJ Contracts - Classification

While some would argue that New Jersey courts have allowed virtually any agreement to be considered a binding contract, there are rules that define a contract which must be met for the contract to be recognized. Additionally, there are also different classifications of contracts.

1) Unilateral and Bilateral Contracts: A unilateral contract is one where one party agrees to do something without receiving anything in return. However, more common is the bilateral contract, where each party promises to gives something to the other party, commonly referred to as quid pro quo or consideration.

2) Enforceable and Unenforceable Contracts: An enforceable contract is one where it is reasonably definite that there was an offer and acceptance. An unenforceable contract is one where there was not agreement to one or more essential terms.

3) Void and Voidable Contracts: A void contract is considered something that never existed because the making of the contract was contrary to law and/or policy. One cannot contract for something that is illegal and then try to enforce the terms of the contract in a court. A voidable contract is one may be valid until discovered to be invalid. This type of contract is valid until one of the parties takes the step to declare it void. For example, a voidable contract is made when one party lacks the capacity to contract. If the party ratifies the contract rather than voids the contract once the circumstances for voidability are found, then the contract becomes valid. If the party declares the contract void once the terms for voidability are discovered, then the contract becomes void.

4) Express and Implied Contracts: An express contract is one where the terms are expressed in written or spoken words. This type of contract has the distinction of being able to easily know the terms of the contract, because they were clearly expressed. On the other hand, the implied contract is one where the parties did not expressly state in written or spoken words the terms. This type of contract is derived from the conduct of the parties and the surrounding circumstances. Both express and implied contracts can be enforced.

5) Exculpatory Contracts: These are contracts where one is agreeing to a provision (ie releases at sporting events, releases for school events). These are not contracts where one feels at liberty to negotiate - these are more "take it or leave it" agreements that one wouldn't necessarily agree to if one were readily able to negotiate the terms. These types of contracts are generally found enforceable so long as they don't go against the public interest.

6) Divisible and Indivisible Contracts: A divisible contract is one where several distinct promises are made with corresponding exchanges from the other party. An indivisible contract is one where either one or several things are being exchanged but it is the intention of the parties that all must be done in exchange for all and not divided one for one. This becomes important in a potential default situation.

For more information on New Jersey contract law, please contact us at 856-210-2107 and/or visit our website at http://rowenlegal.com/