Contract Law
The body of law governing the formation, enforcement, interpretation, and remedies for breach of legally binding agreements.
Contract law governs agreements between parties that create legally enforceable obligations. For a contract to be valid, it must have: offer, acceptance, consideration (something of value exchanged by both parties), legal capacity (parties must be of legal age and sound mind), and a lawful purpose.
Contracts may be written or oral. Written contracts are far easier to enforce. The Statute of Frauds requires certain contracts to be in writing—real estate sales, agreements not performable within one year, contracts for goods over $500 (under the UCC), and guaranty agreements. Oral contracts for these categories are generally unenforceable.
Contract interpretation follows objective principles: courts look at the plain meaning of the written words, not subjective intent. Ambiguous terms may be interpreted against the party who drafted them. Integration clauses ("this document represents the entire agreement") prevent either party from introducing evidence of prior oral representations.
Real-World Example
The handshake deal to sell the business for $500,000 was unenforceable under the Statute of Frauds; without a written signed contract, neither party had a legal remedy when the buyer backed out.