Contracts are agreements that are legally enforceable. A contract may involve a duty to do or refrain from doing something, and the failure to perform such duty is called a breach of contract. The law provides remedies if a promise is breached- aiming to restore the person wronged to the position they would occupy if the contract had not been breached, rather than punish the breaching party.
The existence of a contract requires:
a) an offer;
b) an acceptance of that offer which results in a meeting of the minds,
c) a promise to perform,
d) a valuable consideration,
e) a time or event when performance must be made,
f) terms and conditions for performance,
g) performance, if the contract is "unilateral".
A unilateral contract is one in which there is a promise to pay or give other consideration in return for actual performance. A bilateral contract is one in which a promise is exchanged for a promise. In most cases contracts can be either written or oral, but oral contracts are more difficult to prove and in most jurisdictions the time to sue on the contract is shorter. To be legally binding as a contract, a promise must be exchanged for adequate consideration. Adequate consideration is a benefit or detriment which a party receives which reasonably and fairly induces them to make the promise/contract . Therefore, gifts are not supported by adequate consideration and the promise to make a gift is generally unenforceable.
Contracts are mainly governed by state statutory and common (judge-made) law and private law. Private law generally refers to the terms of the agreement between the parties, as parties have freedom to override many state law requirements regarding formalities of contracts. The Uniform Commercial Code, which has been adopted in some form in nearly every state, governs important categories of contracts, such as sales and secured transactions. Contracts related to particular activities or industries may be highly regulated by state and/or federal law.
Business contracts may include, among others, the following:
- Bill of sale forms
- Power of Attorney forms
- Will forms
- Construction contracts