Answer :
The question is asking about the nature of a contract between Geranium Corporation and Meadow Leasing Company. Let's break down the concepts involved:
Formal vs. Informal Contracts:
- Formal contracts are those that require a specific form or method of creation to be enforceable by law. For example, a contract that must be notarized would be a formal contract.
- Informal contracts, also known as simple contracts, do not require a specific form or method of creation. Most everyday contracts, including leases and agreements made verbally or in writing without special conditions, are informal.
Unilateral vs. Bilateral Contracts:
- A unilateral contract involves one party making a promise in exchange for an act by the other party. For instance, a reward offer for a lost dog is a unilateral contract.
- A bilateral contract involves a mutual exchange of promises between two parties. Each party promises something to the other. Most business agreements, like leases, are bilateral because both parties make commitments to each other.
In the case of Geranium Corporation and Meadow Leasing Company, the contract is described as one where Geranium agreed to rent office space from Meadow with the rent payable monthly, based on the substance of the agreement rather than the form. This suggests the contract is more of a practical agreement focusing on the commitments made by each party rather than a special form or certification.
Given these descriptions, the contract is:
- Informal: It is based on the substance rather than a specified form, making it informal.
- Bilateral: Both parties have made promises – Geranium agrees to pay rent monthly, and Meadow agrees to provide office space.
Thus, the correct characterization of the contract is option (3): an informal contract and a bilateral contract.
