A contract is a legally enforceable agreement between two or more parties. Contracts are the backbone of commercial activity and everyday transactions.
Elements of a Valid Contract
For a contract to be enforceable, it must have:
1. Offer — one party proposes specific terms
2. Acceptance — the other party agrees to those exact terms (the "mirror image" rule)
3. Consideration — each party must give something of value (money, services, a promise)
4. Capacity — both parties must be legally competent (not minors, not mentally incapacitated)
5. Legality — the contract's purpose must be lawful
Types of Contracts
Express contracts — terms are explicitly stated (written or oral)
Implied contracts — terms are inferred from conduct (e.g., ordering food at a restaurant)
Unilateral contracts — one party makes a promise in exchange for an act (e.g., a reward offer)
Bilateral contracts — both parties exchange promises
The Statute of Frauds
Certain contracts must be in writing to be enforceable:
Contracts for the sale of land
Contracts that cannot be performed within one year
Contracts for the sale of goods over $500 (under the UCC)
Contracts to pay another person's debt (suretyship)
Contracts in consideration of marriage
Breach of Contract
A breach occurs when one party fails to perform their obligations. Remedies include:
Compensatory damages — money to cover the non-breaching party's losses