A(n) ______ is a party who agrees to do something under a contract.

Table of Contents Show

Required Components
Distinguished from a Contract-Implied-in-Fact
Further Reading
How Assignments Work
When Assignments Will Not Be Enforced
Delegation or Assignment?

An express contract is an exchange of promises in which the terms by which the parties agree to be bound are declared either orally or in writing, or a combination of both, at the time it is made.

Required Components

Whether oral or written, the contract must manifest a mutual intent to be bound expressed in a manner capable of being understood, and include a definite offer, unconditional acceptance, and consideration.

Distinguished from a Contract-Implied-in-Fact

A contract implied in fact consists of obligations arising from a mutual agreement and intent to promise where the agreement and promise have not been expressed in words.

An express contract and a contract-implied-in-fact both require mutual assent and a meeting of the minds. However, an express contract is proved by an actual agreement (either written or oral), and a contract-implied-in-fact is proved by circumstances and the conduct of the parties.

An assignment of contract occurs when one party to an existing contract (the "assignor") hands off the contract's obligations and benefits to another party (the "assignee"). Ideally, the assignor wants the assignee to step into his shoes and assume all of his contractual obligations and rights. In order to do that, the other party to the contract must be properly notified. Read on to learn how assignments work, including how to keep an assignment option out of your contract.

How Assignments Work

How an assignment of contract plays out depends on many factors, especially the language of the contract. Some contracts may contain a clause prohibiting assignment; other contracts may require the other party to consent to the assignment.

Here's an example of a basic assignment of a contract: Tom contracts with a dairy to deliver a bottle of half-and-half to Tom's house every day. The dairy assigns Tom's contract to another dairy, and--provided Tom is notified of the change and continues to get his daily half-and-half--his contract is now with the new dairy.

An assignment doesn't always relieve the assignor of liability. Some contracts may include a guarantee that, regardless of an assignment, the original parties (or one of them) guarantees performance (that is, that the assignee will fulfill the terms of the contract).

When Assignments Will Not Be Enforced

An assignment of a contract will not be enforced in the following situations.

The contract prohibits assignment. Contract language, typically referred to as an anti-assignment clause, can prohibit (and "void") any assignments. We provide a sample, below.

The assignment materially alters what's expected under the contract. If the assignment affects the performance due under the contract, decreases the value or return anticipated, or increases the risks for the other party to the contract (the party who is not assigning contractual rights), courts are unlikely to enforce the arrangement. For instance, if Tom's local, organic dairy assigned the contract to a factory farm dairy, this would be considered a material alteration.

The assignment violates the law or public policy. Some laws limit or prohibit assignments. For example, many states prohibit the assignment of future wages by an employee, and the federal government prohibits the assignment of certain claims against the government. Other assignments, though not prohibited by a statute, may violate public policy. For example, personal injury claims cannot be assigned because doing so may encourage litigation.

Delegation or Assignment?

In some cases, a party may not wish to assign the contract but only to get somebody else to fulfill its duties. Obviously, not all duties can be delegated--for example, some personal services are usually not delegated because they are so specific in nature. For example, if you hired Ted Nugent to perform at your event, he could not arbitrarily delegate his performing duties to Lady Gaga. To prohibit one party from delegating the responsibilities of the contract, the parties should include specific language to that effect in the agreement. For example, an anti-assignment clause might state, "Neither party shall assign or delegate its rights."

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CONTRACTS: BASIC PRINCIPLES 430x

• Contract: An agreement between two or more parties to perform or to refrain from some act now or in the future. A legally enforceable agreement. [4301]

• Requisites for Contract Formation (Elements) 4305

• Agreement: One party must offer to enter into an agreement, and the other party must accept the terms of the offer

• Consideration: Something of value received or promised, to convince a party to agree to the deal;

• Contractual Capacity/ competent parties: Both parties must be competent to enter into the agreement;

• Legality: The contract’s purpose must be to accomplish some goal that is legal and not against public policy;

• Genuineness of Assent (Arguably part of agreement): The apparent consent of both parties must be genuine; and

• Form: The agreement must be in whatever form (e.g., written, under seal, etc.) the law requires.

UNILATERAL AND BILATERAL CONTRACTS [4302]

• Every contract involves at least two parties -- the offeror/ promisor, who makes the offer/promise to perform, and the offeree/promisee, to whom the offer/promise is made. [4303]

• Unilateral Contract: A unilateral contract arises when an offer can be accepted only by the offeree’s performance (e.g., X offers Y $15 to mow X’s yard). 4302.08

• Bilateral Contract: A bilateral contract arises when a promise is given in exchange for a promise in return (e.g., X promises to deliver a car to Y, and Y promises to pay X an agreed price). 4302.09

• Express Contract: A contract in which the terms of the agreement are fully and explicitly stated orally or in writing.[4302.01]

• Implied-in-Fact Contract: A contract formed in whole or in part by the conduct (as opposed to the words) of the parties. In order to establish an implied-in-fact contract, [4302.02]

(1) the plaintiff must have furnished some service or property to the defendant,

(2) the plaintiff must have reasonably expected to be paid and the defendant knew or should have known that a reasonable person in the plaintiff’s shoes would have expected to be paid for the service or property rendered by the plaintiff, and

(3) the defendant must have had the opportunity to reject the services or property and failed to do so.

• Quasi or Implied-in-Law Contract: A fictional contract imposed on parties by a court in the interests of fairness and justice, typically to prevent the unjust enrichment of one party at the expense of the other.[4302.03]

FORMAL AND INFORMAL CONTRACTS [4302.04/5]

• Formal Contract: A contract that requires a special form or method of formation (creation) in order to be enforceable.

• Contract Under Seal: A formalized writing with a special seal attached.

• Recognizance: An acknowledgment in court by a person that he or she will perform some specified obligation or pay a certain sum if he or she fails to perform (e.g., personal recognizance bond).

• Negotiable Instrument: A check, note, draft, or certificate of deposit -- each of which requires certain formalities (to be discussed later).

• Letter of Credit: An agreement to pay that is contingent upon the receipt of documents (e.g., invoices and bills of lading) evidencing receipt of and title to goods shipped.

• Informal Contract: A contract that does not require a specified form or method of formation in order to be valid.

• The vast majority of contracts are informal (without a seal).

• Executed Contract [4302.11]: A contract that has been completely performed by both (or all) parties. By contrast,

• An executory contract [4302.10]is a contract that has not yet been fully performed by one or more parties.

• Valid Contract [4302.13]: A contract satisfying all of the requisites discussed earlier -- agreement, consideration, capacity, legal purpose, assent, and form. By contrast,

• A void contract [4302.14]is a contract having no legal force or binding effect (e.g., a contract entered into for an illegal purpose);

• A voidable contract [4302.15] is an otherwise valid contract that may be legally avoided, cancelled, or annulled at the option of one of the parties (e.g., a contract entered into under duress or under false pretenses); and,

• An unenforceable contract is an otherwise valid contract rendered unenforceable by some statute or law (e.g., an oral contract that, due to the passage of time, must be in writing to be enforceable).

• The key to contract interpretation is to give effect to the intent of the parties as expressed in their agreement.

• Intent is generally to be ascertained objectively -- by looking

(1) the words used by the parties in the agreement,

(2) the actions of the parties pursuant to the agreement, and

(3) the circumstances surrounding the agreement

as they would be interpreted by a reasonable person -- rather than the parties’ subjective intentions (usually expressed after the fact).

• The Plain Meaning Rule: When a contract is clear and unequivocal, a court will enforce it according to its plain terms, set forth on the face of the instrument, and there is no need for the court either to consider extrinsic evidence or to interpret the language of the contract.

RULES OF INTERPRETATION - [4321]

Know these, they show up all the time…

• Rules of Interpretation:

When a contract contains ambiguous or unclear terms, a court will resort to one or more of the following rules in order to determine and give effect to the parties’ intent.

• Insofar as possible, the contract’s terms will be given a reasonable, lawful, and effective meaning.

• The contract will be interpreted as a whole various and its various provisions will be “harmonized” to yield consistent expression of intent.

• Negotiated terms will be given greater consideration than standard-form, or “boiler-plate,” terms.

• A non-technical term will be given its ordinary, commonly-accepted meaning, and a technical term will be given its technical meaning, unless the parties clearly intended something else.

• Specific terms will prevail over general terms.

• Handwritten terms prevail over typewritten terms, which, in turn, prevail over printed terms.

• When the language used in a contract has more than one meaning, any ambiguity is construed against the drafting party.

• An ambiguous contract should be interpreted in light of pertinent usages of trade in the locale and/or industry, the course of prior dealing between the parties, and the parties’ course of prior performance of the contract.

• Express terms are given preference over course of prior performance, which is given preference over course of dealing, which is given preference over usage of trade.

• Words are given preference over numbers or symbols.