Worthington Group structures Unincorporated Organizations (Contractual Business) according to the United States Constitution, Article I Section X, The Right To Obligation of Contract. We have compiled this additional information regarding 'contracts' for the benefit of those who are presently involved in contracts of one kind or another, or contemplate such.

The Law of Contract has existed from the beginning, even Adam had a verbal contract with God, 'watch over the Garden of Eden'.

The Law of Contract has existed since the beginning of organized society, and forms one of the oldest branches of law relating to transactions of all kinds. Just as the safety of persons and property depends upon Rules of civil and criminal law, security and stability of the business world depends upon the Law of Contracts.

With a philosophy of personal liberty in the United States, the Law of Contract becomes one of the main supports of the structure of the private enterprise system. The right to secure, acquire, and dispose of property is protected by the Law of Contract.

The Law of Contract in modern terms could be defined as 'an agreement containing a promise enforceable in law'.

The four component parts of a contract are:

1) Agreement, offer and acceptance,

2) Mutuality and consideration,

3) Competent parties, and;

4) A legal objective.

In a contract, if no time is specified for the performance of an act, a reasonable time is allowed. The reasonable time may be longer than one of the parties contemplate, but under the conditions which do not specify time, it is still a viable contract.

If time to perform is really not a factor, one could include in the contract language the following. ('Time is of the essence')

There is a difference between 'fact' and 'law'. 'Fact' is sometimes used in opposition to 'Law'. We believe the following will help the reader to see these differences between 'fact' and 'law'.

A) Questions of 'fact' are for a jury, and questions of 'law' are for courts.

B) 'Fact' is an event, 'Law' is a principle.

C) 'Fact' is actual, 'Law' is conceived.

D) 'Fact' is that which has been according to, or in contravention of the rule, 'Law' is a rule of duty.

Two classes of persons are limited in their capacities to make a contract, these are:

1) Those possessing mental capacity, and;

2) Those possessing mental capacity, but lacking legal capacity ie: minors, infants, different languages, etc.

Contracts provide that an agreement entered into must be between competent parties, meaning that all persons who are to be parties to a contract, are presumed to be competent.

(Any person can contract without any restrictions except those mentioned.)

Contracts are classified by characteristics which they possess, and they consist of these characteristics/titles:

A) Formal or Simple (informal);

B) Express or Implied (Quasi);

C) Bilateral or Unilateral;

D) Valid, Voidable, Unenforceable.

The 4 types of contracts listed above are explained below on an individual 'character' basis.

A) Formal or Simple:

a) A Formal Contract is a promise enforceable in law, it is a contract in written form which is signed and sealed. (Early English Law (most all law in these United States comes from English Law), enforced only those promises which were written, signed, and sealed.)

b) A Simple (informal) Contract are those contracts which do not require a seal. Simple (informal) contracts are called 'parol' contracts. 'Parol' as defined means 'oral or verbal', like (Adams' was with God).

When we speak of Formal versus Simple (informal), we are distinguishing the difference between a Formal Contract which is written, signed, and sealed, and a Simple (informal) Contract which is verbal or oral.

B) Express or Implied (Quasi):

a) A Quasi Contract is an obligation to do something imposed upon someone by 'law', but bearing the force of a contract. Quasi defined means 'as if'.

Therefore, one could then assume that a Quasi Contract acts as an obligation 'as if' it were a contract, or at least an obligation analogous to a contract.

Example: Not having all the ingredients of a contract, but treated by law as a contract, such as the Social Security Act.

C) Bilateral or Unilateral:

a) A bilateral contract is one which is to be performed by each party at some future time. A bilateral contract involves two promises, one by each party to the contract.

b) A unilateral contract consists of a promise for an act, the acceptance by each party to the performance of the act requested, rather than the promise to perform it.

Is an Irrevocable Trust 'Pure Trust" a Bilateral or Unilateral Contract?

ANSWER: It is a Bilateral Contract, as it involves two promises, one made by each party to an agreement. It is not a Unilateral Contract because in a Unilateral Contract, acceptance consists of the performance of the act, rather than the promise to perform it.

D) Valid, Voidable, or Un-enforceable:

a) A voidable contract is one that for some reason a court may set aside at the request of the parties. It differs from a contract that is void, in that a contract that is void cannot be enforced by either party.

b) a valid contract is a contract in which all terms of the contract are accepted by all parties, and all parties have performed according to these terms.

c) An un-enforceable contract is a contract in which the terms set out are so vague that neither party would be able to perform on the terms. Consideration is the price for which a promisor bargains in exchange of the promise.

Whenever a right has been surrendered, or a promise to surrender a right has been made at the request of one on the parties, that promise then becomes un- enforceable.

Contract Fraud:

If a contract is entered into by either party; Lindsay v Kroger, 95 P. 839 (P. R. 1909):

"Is admittedly valid of its face, it cannot be invalidated on the grounds of fraud, except by allegation and proof of facts showing he was misled to his prejudice (injury)"

and; Loveland v Jenkins, 95 P. 490, 49 Wash. 369:

"Negligence or laches (failure to do the required thing at the proper time) on the part of the party in signing a contract, without informing himself as to the contents, does not stop him from questioning its validity, where his signature was procured by trickery and fraud on the part of the other party".

and; St. Louis Jewelry Co. v Bennet, 90 P. 246, 75 Kan. 743:

" A defendant induced to sign a contract by misrepresentation of plaintiff, is not barred from relief by the fact that he failed to read the contract or have it read to him before attaching his signature";

and; Grymes v Sanders, 93 U.D. 55, 23 L Ed 798:

" Where a party desires to rescind a contract upon the ground of mistake or fraud, he must upon the discovery of the fact, at once announce his purpose and adhere to it".

and; United States v Fitzgerald, 15 Pet. 407, 10 L Ed 75:

" A contract induced by fraud may rescind in equity".

Mistake Contract Law: Bank of United States v Daniel, 12 Pet. 32, 9 L Ed 989:

" A mistake or ignorance of the law forms no ground of relief from contracts fairly entered into, with full knowledge of the facts. Whatever exceptions there may be to the rule that mere mistakes of law are not remediable will be found few in number, and to have something peculiar in their character".

and; Miffed H.Co. v Rochester, 178 U S 373, 44 L Ed 1108:

" A contract may be rescinded on account of a mistake on one side, on the ground that the parties never met."

Statute of Fraud:

At an early date in English history, the English established what where called Statute of Frauds. These were established in order to prevent fraud by those who would attempt to establish a valuable contract by false testimony of friends.

The Statue of Frauds provided that certain contracts could not be enforced unless the contract was reduced to writing and signed by all parties. This is of course called a Formal Contract.

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