Contract

Contract is a legally binding agreement between two or more parties, each of whom intends to create one or more legal obligations between them. The elements of a contract are "offer" and "acceptance" by "competent persons" having legal capacity who exchange "consideration" to create "mutuality of obligation."

Overview

A contract is a specific type of agreement that, by its terms and elements, is legally binding and enforceable in a court of law. It is a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.

Elements of a Contract

The main elements of a contract are as follows:

• Offer: One of the parties made a promise to do or refrain from doing some specified action in the future.
• Consideration: Something of value was promised in exchange for the specified action or nonaction. This can take the form of a significant expenditure of money or effort, a promise to perform some service, an agreement not to do something, or reliance on the promise.
• Acceptance: The offer was accepted unambiguously. Acceptance may be expressed through words, deeds or performance as called for in the contract. Generally, the acceptance must mirror the terms of the offer. If not, the acceptance is viewed as a rejection and counteroffer.
• Mutuality: The contracting parties had “a meeting of the minds” regarding the agreement. This means the parties understood and agreed to the basic substance and terms of the contract.

Types of Contracts

Contracts can be classified into several types, including:

• Express Contract: A contract in which the terms of the agreement are fully and explicitly stated in words, oral or written.
• Implied Contract: A contract formed in whole or in part from the conduct of the parties.
• Unilateral Contract: A contract in which only one party makes an express promise, or undertakes a performance without first securing a reciprocal agreement from the other party.
• Bilateral Contract: A contract in which each of the parties to the contract makes a promise or set of promises to each other.

Breach of Contract

A Breach of Contract is a legal cause of action and a type of civil wrong, in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance.

See Also

• Contract Law
• Contractual Terms
• Contract Enforcement

Contract Resources
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