Nature and Formation of Contracts
What makes a contract
A contract is a legally enforceable agreement built from four elements: offer, acceptance, consideration, and an intention to create legal relations. Questions in this domain test whether you can identify those elements and distinguish a binding contract from a mere arrangement. Two ideas do most of the work. First, a contract requires agreement (a meeting of minds, objectively assessed) and obligation (each side gives something). Second, the law judges intention objectively: what a reasonable person would infer from words and conduct, not what a party secretly meant.
Traps to watch
- Social and domestic arrangements are presumed not to be intended as legally binding, but the presumption is rebuttable. Look for money changing hands, formal language, or reliance that suggests seriousness.
- Commercial agreements carry the opposite presumption: parties are presumed to intend legal relations unless clear words (for example, "subject to contract" or an express honour clause) negate that.
- Unilateral vs bilateral: a bilateral contract exchanges promises; a unilateral contract exchanges a promise for an act (reward cases). Do not confuse the two when counting offers and acceptances.
- Void, voidable, and unenforceable are not synonyms. A void contract never existed; a voidable one can be rescinded; an unenforceable one exists but cannot be enforced in court.
Rule of thumb
When a scenario asks "is there a contract?", run a checklist in order: (1) identifiable offer, (2) matching acceptance, (3) consideration moving from the promisee, (4) intention to be bound, (5) capacity and formality. If any element fails, the answer is usually "no contract" rather than "breach". Worked example: a neighbour promises to pay for help moving furniture, then refuses. The domestic presumption is weak because payment was promised and the work was done in reliance; a court is likely to find a binding unilateral contract.