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A contract is a set of promises for the breach of which the law gives a remedy. Contracts can be oral or written and they are commonplace in everyday life. Contracts are formed for employment purposes, rental property, bank accounts, sales transactions, and medical privacy. It is important to know what elements form the basis of a contract. A contract consists of an offer, acceptance, and consideration.


An offer to a contract must demonstrate a willingness to enter into a bargain that invites the assent of another party. Usually the person who makes the offer is considered the “master of the offer” because she controls the offer. She is called the “offeror.” Once an acceptance occurred, it is too late for the offeror to add to his offer. The person who is accepting the offer is called the offeree. The offeree has to accept the offer in a “mirror image” of the offeror's terms. If the offeree changes any of the terms, she has both rejected the offer and made a counteroffer.

At this point, the offeree cannot thereafter resurrect the original offer and accept it without the original offeror's consent. As a general rule, an advertisement is not an offer. Instead, advertisements are considered to be only invitations by the seller to the buyer to make his own offer. An exception to this is when the offer is clear, definite and explicit, and leaves nothing open for negotiation, an offer has been made. An example of an advertising offer is when a store has a “first come, first serve” sale. The first person at the store has been offered a product.


An acceptance occurs when a person assents to the terms of an offer in the manner required or invited by the offer. A contract is created once an acceptance is communicated. Once acceptance is dispatched, it is binding on the offeror. If the offeror does not set a time limit on the offeree to accept, the offeree has only a reasonable amount of time to make acceptance before the offeror can extend the offer to another party.

Some contracts have conditions that must be met prior to the creation of a contract. Usually a conditional requirement is clear between the parties during negotiations; however, if it is unclear, the party must look at the language of the condition (if it has been written) and objectively determine what conditions are required.


Consideration must also be present in order for a contract to be formed. Consideration consists of a bargained-for exchange where there must be a benefit to the offeror or a legal detriment to the offeree. A legal detriment is when an individual waives a personal legal right at the request of another party. For example, consideration is found in situations when an individual promises to give up drinking alcohol in exchange for an inheritance. The individual suffers a legal detriment through his promise to abstain from alcohol and thus, consideration for a contract is found. As a general rule, past consideration cannot be used to support a current promise and be used to create a new contract.

Boilerplate language is common in contracts. This language is per se valid because these contracts are used over and over in the same transactions and are rarely modified by either party. Unless the terms of the contract are unconscionable and the average person would find them unreasonable, a boilerplate contract will be upheld.

By Delinda Tamagni           

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