Law Essay Example | Topics and Well Written Essays - 500 words - 2

Law - Essay Example The legal relationship creates rights and obligations between the parties and binds only between those who are privy to the contract, and not other people who are not parties (often described in law books as â€Å"strangers† or by the misnomer â€Å"third parties†) even though those people may be affected by the contract directly or indirectly (p. 15). Usually the agreement will contain a promise or set of promises that each party has made to the other: this is known as bilateral contract because each party promises to do something. For example, X promises to build a house for Y and Y promises to pay X for doing so. Sometimes only one party will make a promise to do something if the other party actually does something stipulated by the former1. For example, X promises to pay $100 if Y completes and returns a marketing questionnaire to X. Such a contract is known as a unilateral contract because the promise is one-sided. Although X promised to pay in the stipulated circumstances, Y is under no obligation to complete and return the marketing questionnaire but if he does the court or arbitral tribunal will recognize a binding agreement that X will pay him $1002. In building projects daring negotiations for the award of a formal contract one sometimes finds so-called letters of intent expressed in terms such as these: â€Å"Please pr oceed with the works and if no formal contract is concluded we will pay you your costs and expenses that you have incurred† (Richard & Stone 2005, p. 115). It is often not appreciated that a letter in such terms can create a unilateral contract which the court will enforce, albeit not the formal contract which the parties had hoped to finalize. And although one often talks of a â€Å"written† or â€Å"formal† contract it is not really the piece of paper which itself is the contract – the piece of paper merely records what the terms of the contract are