Terms To Know In Order To Seal The Deal

You've got yourself a deal!

A contract is a type of binding agreement between two parties. Say you're buying a car. The seller produces a carefully crafted document designed to protect both parties in a legal sense and to transfer ownership from the seller to the buyer. All nice and tidy.

However, some contracts aren't as clear, maybe the terms weren't written down or maybe only one person agreed to the conditions upfront. Let's take a look at a few different types of and terms about contracts so you come out on top in your next contract negotiation.

A golden handshake (parachute clause)

This is a type of clause in an employment agreement. When an executive gets shoved out the door, under certain circumstances they will receive what's known as a golden handshake. Maybe they got fired, maybe they were "asked to resign," or maybe they got re-org'd (the mother of all corporate excuses). Either way, they always take the money and run.

Golden handshakes are legal deals, also known as golden parachutes. A notable example might be now-former Yahoo CEO Marissa Mayer. She was given a 23-million-dollar golden parachute after the Yahoo/Verizon deal was approved. It's thought that the first use of the term was back in 1961 when TWA creditors wanted to take control away from legendary recluse Howard Hughes.

Unilateral contract

A unilateral contract is one where a promise to execute an agreement is made by only one party. That person is the offeror.

Have you ever lost your keys, your phone, your dog? Did you ever offer a reward to someone if they found it? That's a "unilateral contract." You are promising to pay the person who finds your precious cargo (the offeree). The offeree takes it upon themselves to search for your goods without any formal acknowledgement or agreement with the offerer. If they find and return it, then the contract has been successfully executed. Pay up!

Bilateral contract

Bilateral contracts happen all the time, both formally and informally. Bilateral contracts are mutual agreements between two parties. Most business contracts are bilateral.

A simple example would be walking into a fast food restaurant and ordering a double cheeseburger. What you are doing is promising to perform an act (paying them money) in exchange for them performing an act (giving it to you). Simple. Both parties benefit equally from the exchange. Now, if your burger is as cold as ice, then you could consider your bilateral deal null and void.

Implied contract

With one of these, a written or verbal agreement isn't needed. The contract is implied; the actions/behaviors/intentions of both parties have created an agreement. The website Rocketlawyer.com states "there must be an unequivocal offer, an unequivocal acceptance, mutual intention to be bound, and also consideration."

Implied contracts can also be called tacit agreements, either way they happen often in everyday life. Pumping gas, taking your cat to the veterinarian, using your credit card . . . all interactions that consist of implied contracts. By pumping the gas or using your credit card, you are agreeing to the terms of that company: They want to get paid or paid back after your use! And you will pay them, without them telling you. Adulting!

Express contract

An express contract is the opposite of implied; everything is clearly laid out and terms are clearly stated. When in doubt, consult an Ivy League website (Cornell.) This 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." There is no ambiguity here. And, no way of fighting that breach of contract either.

Confidentiality agreement (NDA)

This is an employment-related contract that asks you not to disclose certain information about the employer to third parties. These are also referred to as a nondisclosure agreements, or NDAs.

Lately, they've been common practice in the tech industry to keep the next big tech release a juicy secret until it is . . . released. If you violate an NDA and blab some juicy intel to the New York Times, be prepared for corporate security ninjas and a big lawsuit.

Employment separation agreement

This is another employment contract of sorts, and if you're signing one of these, it's the last one you'll sign for that company. Formally, this is a called a termination agreement, whether you agree with it or not. It's mainly a formality, so the business can cover all of their legal bases as they show you the door. Don't worry, there's other fish in the sea.

Settlement agreement

Two parties have been bickering in court for ages, and, for whatever reason, they can't come to a financial arrangement. So, they decide to enter into a general business contract known as a settlement agreement. This means that those involved are ending the suit, and someone will pay out some cash to the injured party to make it all go away.

But, their not admitting guilt! And, to keep it under wraps, there's always this addendum: "Settlement terms were not disclosed."

Warranty

This is known as a sales-related contract. Let's say you purchased a big washer/dryer combo. You elect to get a warranty (something they were probably anxious to sell you, anyway). A warranty is assurance from the seller that the item bought will live up to the performance standards that have been promised.

So, if that new washer ends up shredding your nice shirt, you're entitled to seek reparations in the form of a refund for your item or a repair job. Caveat emptor: The shirt may or may not be covered!

Aleatory contract

This is a type of contract that goes into effect if an uncertain event happens; however, it all depends on a contingent event. A classic example of an aleatory contract is an insurance policy. The insured only uses the benefits of an insurance policy when an event covered in the insurance policy occurs, such as a burglary, fire, or flood.

Gentleman's agreement

This 1880s-era Americanism called a gentlemen's agreement is a tricky one as it generally comes in the form of a handshake. It's legally unenforceable and more a matter of, in the words of Looney Tunes character Foghorn Leghorn, "puhsonal honah, suh." If your gentleman's agreement was violated, you could demand satisfaction since your honor had been insulted. Pistols at 20 paces at high noon, that type of thing.

The term first appeared in the P. G. Wodehouse 1929 story collection Mr. Mulliner Speaking. (There was also a 1947 novel and film titled Gentleman's Agreement, which starred Gregory Peck.)