Introduction to Contract Formation

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As opposed to civil law, where contracts are generally formed simply through offer and acceptance, in the common law a promise becomes an contract when there is not only an offer by one party (offeror) that is accepted by the other party (offeree) but also an exchange of legally sufficient (a gift or donation does not generally count as consideration); hence the equation learned by law students: offer + acceptance + consideration = . The law regards a counter offer as a rejection of the offer. Therefore, a counter offer does not serve to form a contract unless, of course, the counter offer is accepted by the original offeror.

For a promise to become an enforceable contract, the parties must also agree on the essential terms of the contract, such as price and subject matter. Nevertheless, courts will enforce a vague or indefinite contract under certain circumstances, such as when the of the parties, as opposed to the written instrument, manifests sufficient certainty as to the terms of the agreement.

An enforceable agreement may be manifested in either written or oral words (an express contract) or by conduct or some combination of conduct and words (an contract). There are exceptions to this rule. For example, the Statute of Frauds requires that all contracts involving the sale of real property be in .

ln a contractual dispute, certain to the formation of a contract may permit a party to escape his/her obligations under the contract. For example, illegality of the SUBJECT matter, fraud in the , duress and the lack of legal to contract all enable a party to attack the validity of a contract.

ln some cases, individuals/companies who are not a party to a particular contract may nevertheless have enforceable rights under the contract. For example, contracts made for the of a third party (third-party beneficiary contracts) may be enforceable by the third party. An original party to a contract may also subsequently transfer his rights/duties under the contract to a third party by way of an assignment of rights or delegation of duties. This third party is called the assignee in an assignment of rights and the delegate in a delegation of duties.