An Introduction to Contract Formation

• Author: Franklin G. Snyder, Mark Edwin Burge
• Pages: 36-36

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36 CHAPTER II: CONTRACT FORMATION

An Introduction to

CONTRACT FORMATION

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 law—which generally do not depend

on whether you have agreed to be bound to the rules—the 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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