First Principles of Business Law

Making a contract
1. How and when agreements become contracts

1.1. Distinguishing contracts from other agreements



A contract is an agreement between two or more persons  which, because it meets certain requirements, is legally enforceable. Being 'legally enforceable' means that, if one contracting person (or 'party') does not do what they promised, the other party can bring a legal action and ask the court for an appropriate remedy. But it is important to understand that not every agreement is a contract and the courts will not help to enforce agreements that are not contracts.

Making a contract is therefore an event of significance and it is important to know whether an agreement is a contract or not? The way to decide this question is to ask whether three essential legal requirements have been attended to.  It is only if these essential requirements are satisfied that a contract is formed.  The three essential aspects of contract formation are outlined on the next screen. 










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