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Published online by Cambridge University Press: 05 June 2012
Definition
The most common response to the question “What is a contract?” is “an agreement,” but a contract is more than that. The generally accepted legal definition of a contract is that it is a promise, or set of promises, that the law sees as a duty, for the breach of which the law will provide a remedy in the form of an action for damages. Thus a contract is a legally enforceable agreement.
Some Contracts Terminology
Promisee – A person to whom a promise is made
Promisor – A person who makes a promise
Offeree – A person to whom an offer is made
Offeror – A person who makes an offer
Contract Formation: Elements of a Contract
In order to make an agreement legally enforceable, three elements must be present – offer, acceptance, and consideration.
Offer
What is an offer? An offer is simply a manifestation of an intention to form a contract. The legal test of whether something is an offer is whether a reasonable person in the position of the offeree believes that acceptance creates a contract.
SIDEBAR: The reasonable person
The “reasonable person” is heavily relied upon by the law. No one can say with any specificity who this person is or what this person thinks, but the “reasonable person” might best be thought of as describing the “average” person, or perhaps the “normal” person. We will spend much more time examining this concept in the portion of this book that covers negligence.
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