Louisiana Bail Bonds Practice Exam

What is another term for an informal contract?

1. Complex contract

2. Simple contract

3. Formal contract

4. Implied contract

The correct answer is: Simple contract

An informal contract is often referred to as a simple contract. This type of contract does not require formalities such as written documentation or specific legal language to be valid. Instead, a simple contract is typically based on the mutual agreement of the parties involved, which can be communicated verbally or through actions. The essence of a simple contract lies in the parties' intentions to create a binding agreement, regardless of its complexity or the lack of elaborate documentation. In contrast, a formal contract is typically characterized by the presence of specific legal requirements, such as being in writing, and following certain formats or regulations. An implied contract, on the other hand, arises from behavior rather than an explicit agreement. While both formal and implied contracts differ significantly from simple contracts in terms of formation and enforceability, the distinguishing factor for simple contracts is their lack of necessary formalities, making this terminology the most appropriate in describing an informal contract.