Overview

“A deal is a deal.” Contract law is the glue of capitalism. It allows strangers to trust each other because the state will enforce their promises.

Core Idea

Elements of a Contract:

  1. Offer: “I will sell you my car for $5,000.”
  2. Acceptance: “I agree.”
  3. Consideration: Something of value exchanged (Money for Car). A promise without consideration is a gift, not a contract.

Formal Definition (if applicable)

Breach of Contract: Failing to perform your side of the deal. The remedy is usually money (Damages), not forcing you to do the work (Specific Performance).

Intuition

  • Written vs. Oral: Oral contracts are valid, but hard to prove. “Get it in writing.”
  • Capacity: You can’t make a contract if you are a minor, drunk, or insane.

Examples

  • Employment Contract: You work, they pay.
  • Terms of Service: That long document you didn’t read but clicked “I Agree” to. (It’s a valid contract).
  • NDA (Non-Disclosure Agreement): Promising to keep a secret.

Common Misconceptions

  • “I can cancel within 3 days.” (Only for specific things like door-to-door sales. Generally, once you sign, you are stuck.)
  • “I didn’t read it.” (Doesn’t matter. You are still bound by it.)
  • Force Majeure: “Act of God.” An event (like a hurricane) that excuses you from the contract.
  • Statute of Frauds: Certain contracts (Real Estate, Marriage) must be in writing to be valid.

Applications

  • Business: Every transaction is a contract.
  • Real Estate: Leases and mortgages.

Criticism / Limitations

“Adhesion Contracts.” Big companies give you a “Take it or leave it” contract. You have no bargaining power.

Further Reading

  • Farnsworth, Contracts
  • Fried, Contract as Promise