Chapter 5: Introduction to Contract
I. Introduction to contract law
Contract: is a deliberate and complete agreement between two or more
competent persons, not necessarily writing, supported by mutual consideration, to
do some act voluntarily, that is enforceable in a court of law
o An agreement: is composed of an offer to enter into a contract and an
acceptance of that offer
Simple agreement: can be broken without legal consequences
Enforceable contract: agreement which has legal consequences
o Complete: the agreement must be complete/certain.
o Deliberate: both parties must want to enter into a contractual relationship
(intention to create legal relations)
o Voluntary: the agreement must be freely chosen and not involve coercion
or other forms of serious unfairness.
o Between two or more competent persons: there must be at least two
parties to any contract
o Supported by mutual consideration: involves a bargain or exchange
between parties (a party must give something of value in exchange for
something of value from other party)
o Not necessarily in writing: as a general rule, even oral contract is
enforceable. There are some exceptions, though.
o Contract law is facilitative: allows participants to create their own rights
and duties which may later be enforced by judge if called to do so
Contract should be in writing because:
o Cooperation and good will can suddenly evaporate
o Personnel can change
o Memories may become selective and selfserving
o Genuine differences of opinion can emerge
• For the most part, the rules governing contracts are based on common law.
II. Legal factors in creating the contract
o Most contractual relationships begin with communication
o It is not just about discussing possibilities with the other side but
automatically laden with legal meaning.
o Contract laws concerns itself with what the negotiators say and do instead
of what they think or imagine. (Ex: if a person makes what looks like an
offer to the other, the other person is entitled to accept it whether it was
intended as one or not)