A contract is a voluntary agreement or promise between legally competent parties, supported by legal consideration, to perform (or refrain from performing) some legal act. That definition may be easier to understand if its various parts are examined separately. A contract must be
- voluntary – no one may be forced into a contract,
- an agreement or a promise – a contract is essentially a legally enforceable promise;
- made by legally competent parties – the parties must be viewed by the law as capable of making a legally binding promise,
- supported by legal consideration – a contract must be supported by something of value that induces a party to enter into the contract, and that something must be legally sufficient to support a contract, and
- having to do with a legal act – no one may legally contract to do something illegal.
Licensees use many types of contracts and agreements to carry out their responsibilities to sellers, buyers, and the general public. The general body of law that governs such agreements is known as contract law.
Express and Implied Contracts
Depending on how a contract is created, it is either express or implied.
- An express contract exists when the parties state the terms and show their intentions in words. An express contract may be oral or written.
- In an implied contract, the agreement of the parties is demonstrated by their acts and conduct.
