Contracts
| Author | Keith Bice |
| Pages | 153-156 |
Page 153
A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.
The freedom to contract has not existed throughout history. In medieval England, the courts did not engage in the enforcement of agreements between individuals. Rather, the feudal society that ruled personal interaction was relied upon for all forms of trade. As society evolved to emphasize individual freedoms over social caste, the ability to contract was viewed as a fundamental tenet of individual liberty. Writers and economic theorists such as Adam Smith, David Ricardo, Jeremy Bentham, and John Stuart Mill "successively insisted on freedom of bargaining as the fundamental and indispensable requisite of progress; and imposed their theories on the educated thought of their times."
Article I, Section 10 of the U.S. Constitution protects the individual right to contract by stating that, "No State shall … pass any … law impairing the obligations of Contracts." Many state constitutions contain similar provisions.
Generally, the law of contracts does not come from statutes passed by Congress or by state legislatures, but rather is a product of the common law, the continuing line of court decisions dating back to pre-colonial English courts. The common law is living and constantly evolving, as modern courts continue to analyze, revise and even disagree on its application. The American Law Institute, a collection of legal scholars and practitioners, attempted to catalogue the common law of contracts in its Restatements of the Law of Contracts in 1932. The Restatement, Second, of the Law of Contracts was published in 1979. The Restatement, although it does not have the force of law itself, is generally regarded as an excellent source. The law of contracts is also significantly influenced by the Uniform Commercial Code (UCC), which has been adopted in forty-nine states. The UCC is an attempt to standardize laws dealing with contracts and commerce. The UCC is beyond the scope of this article.
Page 154
A contract consists of one individual making an offer, another accepting the offer, and the existence of consideration between the contracting parties.
An offer is the expression of a willingness to enter into a bargain. An offer must be directed to a particular offeree and be sufficiently clear so as to justify another individual in the belief that acceptance of the offer would constitute an agreement. Although an offer need not set forth all terms of the potential bargain (even the price may be left to be later determined), a valid offer must identify the fundamental elements of the proposed agreement. An offer may be revoked at any time before it is accepted or before it is reasonably relied upon by another individual.
Acceptance of an offer is the communication by the offeree of mutual assent, that is, the agreement to be bound by the terms of an offer. An offer may be accepted only by a person to whom the offer was directed and only before the offer terminates or is revoked. A valid acceptance must be communicated to the offeror by the same or similar means under which the offer was communicated, and must be unequivocal to make the agreement binding. At common law, it is generally held that any deviation from the terms of the offer is not an acceptance, but rather a rejection and a counteroffer. If the offer identifies a...
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