An Introduction to Contract Formation

AuthorFranklin G. Snyder, Mark Edwin Burge
An Introduction to
Did the Parties Consent? A contract is, put simply, an agreement between two
or more private parties creating obligations that the law will enforce. Unlike
obligations imposed under criminal law and tort lawwhich generally do not depend
on whether you have agreed to be bound to the rulesthe obligations in contract law
are, at least in theory, voluntary. That is, you are bound to do a certain thing not
because the law makes everyone to do it, but because you personally have promised
another person to do it. Thus, it is usually important in analyzing contract questions
to determine what the parties agreed to do for each other. That agreement becomes
consent to be bound. Most of the time, this isn’t much of a problem. When you hit the
“buy” button on a screen or hand over money to a cashier, one could easily to assume
that you are intending to buy some sort particular good or service, that the seller
intends you to have it, and that both of you expect to be bound. Generally the
transaction goes on perfectly well. Similarly, in a real estate purchase, there are
extensive written documents that are signed by both parties, often with legal counsel
involved. When two parties have signed “on the dotted line” to the same piece of
paper, it is not hard to find agreement.
Transactions are, however, sometimes not that simple or that formal.
Sometimes the alleged contract has been formed through the exchange of
communications, but there is no one single moment when both parties seem to be
agreeing on exactly the same thing at exactly the same time. In the modern world,
such situations occur with some frequency. We therefore need some way to determine
if the communications exchanged by the parties demonstrate sufficient agreement
that will (if supported by consideration) create an enforceable contract. This part of
contract law is often called “formation” or “offer and acceptance.”

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