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A contract is any agreement enforceable by law.
There are 3 theories behind contract law:
1. Equity Theory of Contract: whether parties to a
contract exchanged things of equal value.
2. Theory of Contract Law: focuses on the exercise of
each party’s free will.
• “Did the parties really agree to these terms?”
3. Formalist Theory: if the elements exist, the contract
exists.
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Offer
Acceptance
Consideration
Genuine Agreement
Capacity
Legality
Proposal made by one party (the offeror) to another party
(the offeree) indicating a willingness to enter a contract.
Does the following example constitute an offer?
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A person says to a friend "I offer to sell you my iPhone."
This would not be sufficient to give rise to an offer to form
a contract because it doesn't include any of the necessary
details, such as price and other terms required in a legal
sale transaction.
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Take 1 minute and make the previous proposal (with the
iPhone) into a valid offer.
 “I offer to sell you my brand new iPhone 5s for $200 and you must
make a decision and provide the money to me by Saturday,
December 27th, 2014….and I will provide you with the phone by
Thursday, January 1st, 2015.”
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So….person X has paid or given whatever it is the above
offer asked for (as rewritten by the class) and taken the
iPhone.
 Was this offer accepted?
 Does it matter that the person never said “I accept?”
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Acceptance is an acknowledgment by the person
to whom an offer is made that the offer is
accepted.
 Must comply with the terms of the offer and be communicated to the
person who proposed the deal.
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Usually what is being exchanged. It is what each party gives
up in order for an agreement to be valid.
 Consideration can be money, property, or services.
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Was there consideration for the iPhone contract?
Offer & acceptance go together to create genuine agreement,
or a meeting of the minds.
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Agreement can be destroyed by:
Fraud
Misinterpretation
Mistake
Duress: actions that broke the law were only performed out of an immediate
fear of injury
▪ Undue influence: involves one person taking advantage of a position of
power over another person
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Capacity: presumes that anyone entering a contract has
the legal capacity to do so.
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The only people whom are exempt from this are:
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Minors
Mentally incompetent
Drugged
Drunk
Parties are not allowed to enforce contracts that involve
illegal acts.
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This includes any activity made illegal by statutory law such as:
▪ Crimes
▪ Torts
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Valid, void, voidable, or unenforceable.
Express or implied.
Bilateral or unilateral.
Oral or written.
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Voidable Contract: when a party to a contract is able to
void or cancel a contract for some legal reason.
Unenforceable Contract: one the court will not uphold,
generally because of some rule of the law, such as legality.
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Express Contract: stated in words and may be either oral or
written.
Implied Contract: comes about from the actions of the
parties, sometimes without exchanging a single word.
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Bilateral Contract: contains two promises. One party
promises to do something in exchange for the other’s promise
to do something else.
Unilateral Contract: contains a promise by only one person to
do something.