What is a contract? | Lanbuk on the Law of Contract

In simple terms

A contract is an agreement that the law will enforce. The parties choose the deal. The court does not write it for them, but it will hold them to what a would have understood them to promise.

Contract law is the law of agreements and promises. It asks three questions. Which agreements will the law enforce? What must each side do? What can the other side claim if that is not done?

A contract is an agreement that gives rise to obligations recognised by law. What sets it apart from other legal duties is that the parties took them on. In simple terms, it is a deal freely made, on terms freely talked through. If a statute forces you into a set form, and fixes the important terms for you, that is not really a contract at all.

The law has more than one job here. The main one is to support the bargains that make up a market, and also to keep them within bounds. Inside a courtroom it decides disputes. Outside it, it lets people take risks they would otherwise refuse, because each side can be held to the bargain, and can agree in advance what happens if the other defaults.

That power is not unlimited. Some deals the law will not help: a contract to commit a serious crime, or one that is against public policy. More often the control is said to be for the parties themselves, for example where one side did not really consent.

A contract can be made by words, by conduct, or by both. The words can be written, spoken, or a mix. Whatever the form, four things are required: agreement, which is usually found in offer and acceptance; ; and an . Capacity is dealt with as a separate limit on who can bind themselves.

The books to read with this chapter are Cheshire and Fifoot, Richard Stone, Treitel, Poole, Beale, Bishop and Furmston, and Duxbury's Nutshell.

Words and Latin in this note

Intention to create legal relations: The parties meant the promise to be enforceable in court. Domestic arrangements are presumed not to. Commercial ones are presumed to. Open the note.
Consideration: The price of a promise: something of value given, or promised, in return. A bare promise to make a gift has none. Open the note.

Memory map

What is a contract?

Key points

A contract is an agreement the law will…
It can be made by words or conduct
The core requirements are agreement,…

Key terms

Consideration
Intention to create legal relations
Reasonable man

Take-home points

A contract is an agreement the law will enforce, based on the parties' own promises.
It can be made by words or conduct. Writing is not always required.
The core requirements are agreement, consideration and an intention to be legally bound.

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