Elements of a Contract
The components that make an agreement legally enforceable in the common law tradition: offer, acceptance, consideration, capacity, and legality.
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A contract is a legally enforceable agreement between parties. In the common law tradition, the core elements are offer, acceptance, consideration, capacity, and legality. An offer is a definite statement of terms made with the intention that it becomes binding upon acceptance; acceptance is the offeree's agreement to those terms, traditionally required to mirror the offer exactly under the "mirror image rule," with modern exceptions such as the battle-of-the-forms rules of the Uniform Commercial Code (UCC) for the sale of goods.
Consideration is what distinguishes a contract from a mere promise: each party must give something of legal value — payment, performance, or a forbearance — in exchange for the other's promise. Gift promises are generally unenforceable for lack of consideration, although promissory estoppel can enforce a promise when the other party reasonably relied on it to their detriment. Capacity requires the parties to be legally able to contract: adults of sound mind, with the contracts of minors typically voidable. Legality requires the purpose of the agreement to be lawful.
Contracts may be written or oral, but the statute of frauds requires a signed writing for certain categories: sales of land, guarantees of another's debt, agreements that cannot be performed within a year, and (under the UCC) sales of goods above a threshold amount. Electronic records satisfy these requirements in modern law.
Breach gives the injured party remedies designed to put them where performance would have — expectation damages — or, in limited cases, reliance damages, restitution, or specific performance for unique goods or land. American contract law is largely shaped by the Restatement (Second) of Contracts and UCC Article 2, which together provide a more flexible framework than the historical rules they replaced.
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common law contract law contracts law