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Chapter 5 The Agreement

Learning Objectives

After reading this chapter, you should understand the following:

  1. What a contract offer is, and what proposals are not offers
  2. How an offer is communicated
  3. How definite the offer needs to be
  4. How long an offer is good for
  5. How an offer is accepted, who can accept it, and when acceptance is effective

In this chapter, we begin the first of the four broad inquiries of contract law mentioned in Chapter 4 "Introduction to Contract Law": Did the parties create a valid contract? The answer is not always obvious; the range of factors that must be taken into account can be large, and their relationships subtle. Since businesspeople frequently conduct contract negotiations without the assistance of a lawyer, it is important to attend to the nuances in order to avoid legal trouble at the outset. Whether a contract has been formed depends in turn on whether

  1. the parties reached an agreement (the focus of this chapter);
  2. consideration was present;
  3. the agreement was legal; and
  4. the parties entered into the contract of their own free will, with knowledge of the facts, and with the capacity to make a contract.

Factors 2, 3, and 4 are the subjects of subsequent chapters.