Chapter contract interpretation is to determine the intent of

Chapter Four Summary

            Chapter four of Emerson’s, Business Law, provides a detailed
explanation of the nature, classification, and formation of contracts. The
nature of a contract explains what a contract is, what makes one valid, and how
they are interpreted. A contract is a legally enforceable agreement, express or
implied (Emerson, 2015, p. 93). The four essentials elements for a contract to
be valid include: capacity of the parties, mutual agreement or meeting of the
minds, consideration, and legality of subject matter. A common misperception is
that a written document is a contract; however, it is really evidence of a
mental agreement. Also, determining the intent can be tricky. The basic
principle of contract interpretation is to determine the intent of the parties
from words or actions as a whole (Emerson, 2015, p .94). Fortunately,
commonsense rules can help resolve uncertainties and/or contradictions if they
occur.

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            Contracts may be classified by the
type of formation, performance, or enforceability. If a contract is classified
by formation, then it is either an express or implied contract. An express contract
is stated in words, written or oral, or partly written and partly oral. While
an implied contract is either implied by fact or law. If a contract is classified
by performance, then it is a bilateral or unilateral, or executed or executory
contract. A bilateral contract is based on an exchange of promises, while a unilateral
contract involves a promise by one group and an act by the other. An executed
contract occurs when both parties have met each promise. On the other hand, an executory
contract occurs when something still needs to be done from one or both parties.
Lastly, a contract can be classified by enforceability. When a contract is classified
by enforceability, it is either valid or unenforceable, or void or voidable. A valid
contract meets the legal requirements and can be enforced by either party,
while an unenforceable contract doesn’t meet the necessary legal requirements
and cannot be enforced. A void contract has no validity and cannot be enforced
by either