What is contract law?

Formation

• Offer — a definite proposal, not an invitation to negotiate.
• Acceptance — agreement to those terms; changing them is a counter-offer.
• Consideration — each side gives up something. A bare promise to make a gift is usually unenforceable.
• Capacity and legality — minors and incapacitated parties can often void agreements; illegal purposes are unenforceable.

When writing is required

The statute of frauds requires a signed writing for certain contracts: sales of land, agreements that cannot be performed within a year, promises to answer for another's debt, and sales of goods over $500 under the Uniform Commercial Code. Otherwise oral contracts are enforceable — they are simply much harder to prove.

Breach and remedies

The normal remedy is expectation damages: enough money to put the injured party where performance would have left them, reduced by what they could reasonably have avoided. Consequential damages require foreseeability. Specific performance — an order to actually perform — is reserved for unique subject matter such as real estate. Liquidated damages clauses are enforced if they were a reasonable pre-estimate of loss, and struck down if they operate as a penalty.

Defences

Fraud, duress, undue influence, mutual mistake, unconscionability, impossibility and, where the parties provided for it, force majeure. Each is fact-specific, and the written terms usually decide which are even available.

Which law applies

Sales of goods fall under the UCC as adopted by each state; services and real estate fall under common law. The distinction changes the rules on modification, acceptance and remedies, so it is settled early in any dispute.