Definition: A contract arises from a legally enforceable promise.

Essential Elements: Under common law, a contract requires:

• Offer: A proposal made by one party (offeror).
• Acceptance: Agreement by the other party (offeree).
• Consideration: Exchange of something of legal value (not a gift or donation).

Quote: "A promise becomes an enforceable contract when there is an offer by one party that is accepted by another with legally sufficient consideration."

• Counter Offer: A counter offer rejects the original offer and requires acceptance by the original offeror to form a contract.
• Essential Terms: Key terms like price and subject matter must be agreed upon.

Quote: "For a promise to become an enforceable contract, the parties must also agree on essential terms such as price and subject matter."

• Vague or Indefinite Contracts: Courts may enforce these if conduct clarifies the agreement.
• Forms of Contracts:

II. Challenging Contract Validity

Certain circumstances allow a party to challenge a contract:

• Illegality: If the subject matter (e.g., illegal drugs) or consideration is unlawful.
• Fraud: Intentional deception inducing a party to enter the contract.
• Duress: Force, threats, or undue pressure leading to agreement.
• Lack of Capacity: One party lacks legal ability to contract (e.g., minor, mentally incompetent).

III. Third-Party Rights

• Third-Party Beneficiary Contracts: Some contracts are enforceable by intended third parties.
• Assignment & Delegation:

IV. Role of Lawyers and Common Contract Clauses

Lawyers' Role: Drafting, negotiating, and advising on contracts, often using templates tailored to specific situations.

Common Contract Clauses:

• Acceleration: Requires earlier payment under certain conditions.
• Assignment: Governs the transfer of rights/obligations.
• Confidentiality: Protects sensitive information from disclosure.
• Consideration: Specifies what motivates each party to enter the contract.
• Force Majeure: Excuses performance due to uncontrollable events (e.g., natural disasters).
• Liquidated Damages: Predetermines compensation for breach.
• Entire Agreement (Merger): States the written contract is complete and overrides prior agreements.
• Severability: Ensures remaining terms remain valid if a clause is unenforceable.
• Termination: Defines how and when the contract can end.
• Payment of Costs: Determines financial responsibility for contract-related expenses.

Conclusion:This episode provides an overview of contract formation, validity challenges, third-party rights, and common clauses. Understanding these principles helps navigate legal agreements effectively.