New Jersey Real Estate Salesperson · Contracts
Contract Classifications
On this page 6 sections
In 30 seconds
Every contract can be sorted by who promises (bilateral or unilateral), how it formed (express or implied), how far along it is (executed or executory), and whether courts enforce it (valid, void, voidable, unenforceable). The most tested line is void, which never existed, versus voidable, which is valid until the protected party cancels.
Why this matters
Exam questions describe one contract and ask you to label it two or three ways at once, and licensees who blur void with voidable or assignment with novation pick the wrong answer.
The college version
In normal terms
- Bilateral means both sides promise; unilateral means one side promises and the other side performs. Express means stated in words; implied means shown by conduct. Executory means something remains to be done; executed means fully performed.
- Void never existed, voidable is valid until the protected party elects to cancel, and unenforceable is valid but a court will not compel it.
- An option is a unilateral contract, and moving a contract to a new person is either an assignment (rights move, liability stays) or a novation (a new party replaces the old and the old is released).
Concepts in this outline
- Bilateral and unilateral — bilateral is a promise exchanged for a promise, binding both parties; unilateral is a promise exchanged for an act, binding only the promisor until the act is performed.
- Express and implied — express contracts are stated in spoken or written words; implied contracts arise from the parties' conduct without stated terms.
- Executed and executory — executed means fully performed by both sides; executory means duties remain, such as a signed purchase agreement awaiting closing.
- Valid, void, voidable, and unenforceable — valid is enforceable; void never existed; voidable is valid until the protected party cancels; unenforceable is valid but courts will not compel performance.
- Unilateral option contracts — the optionor promises to sell at fixed terms during a set period; the optionee pays for the choice and may buy or decline.
- Assignment and novation — assignment transfers a party's rights but not liability; novation substitutes a new party with consent and releases the original party from obligations.
Eli explains
The same idea, in plain words
Explain it like I’m 10
Classification means putting labels on the same contract from different angles.
A bilateral contract is a promise for a promise: the seller promises a deed, the buyer promises money. A unilateral contract is a promise for an act, so only one side is bound until the other performs. Both can be enforced, but only a bilateral contract binds both parties at signing.
An express contract is stated in words; an implied contract arises from conduct.
An executory contract still has work left, like a signed purchase agreement awaiting closing. An executed contract is fully performed.
Valid means enforceable. Void means it never was a contract. Voidable means valid until the protected party, such as a minor, cancels. Unenforceable means real, but a court will not compel it (see Topic 07).
An option is unilateral: the owner promises to sell at set terms for a set time, and the holder may buy or walk away. An assignment transfers rights but leaves the original party liable. A novation substitutes a new party and releases the old.
Worked example
Dante holds a signed contract to buy a Hoboken brownstone, so the deal is bilateral, express, and executory. His cousin Lena wants the house instead. If Dante assigns the contract, Lena gains his right to buy, but Dante remains liable if she fails to close. If the seller agrees to a novation, Lena steps into Dante's place and Dante is released entirely. Meanwhile the seller's neighbor, who is seventeen, signed a separate contract to sell a parking spot; that contract is voidable at the minor's election. After Lena closes on the brownstone, the contract becomes executed.
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