Simple Contract Law
Simple contract law covers the basic elements of a contract, and the requirements for an enforceable contract to exist between two or more parties. In the United States and many Western countries, enforceable contracts must contain six basic elements. The basic elements of a contract are mutual consent, offer and acceptance, mutual consideration, performance or delivery, good faith and non-violation of public policy.
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Mutual Consent
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Enforceable contracts require mutual consent. Mutual consent is also referred to as a "meeting of the minds." Each person that signs the contract must understand what the contract covers. If one or more parties to the contract does not understand what the contract covers, then the contract is not enforceable. For example, if an artist and a producer sign a contract, and the artist believes the contract requires him to design album art, but the producer believes that the contract requires the artist to record music for the album, then there is no mutual consent, and the contract is not enforceable.
Offer and Acceptance
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Enforceable contracts must contain one or more offers to another party that accepts the offer. An offer is present if one party indicates to another that he is willing to form a contract on specified terms without any more negotiation. Acceptance is present if the party that receives the offer expresses his agreement with the terms of the offer. For example, if a photographer indicates to a wedding planner that he is willing to form a contract to perform photography services at a wedding without any more negotiation, then an offer is present; and if the planner expresses agreement to the terms of the offer, then acceptance is present.
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Mutual Consideration
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A contract is enforceable only if each party to the contract exchanges something of value. Enforceable contracts must have a mutual exchange of something of value. For example, if a photographer and a model enter into a contract, and the photographer photographs the model for images to display in the photographer's portfolio, and the model receives copies of the images to display in her portfolio, then mutual consideration is present. If, however, the photographer and model form a contract that stipulates only the photographer may display the photographs, and the model may not display or use them in any medium, then the contract may not be enforceable.
Performance or Delivery
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A contract is enforceable only if the action specified in the contract is completed. For example, if a contract between a celebrity and her manager requires the celebrity to perform at a show booked by the manager, then the contract is enforceable if the manager books the show. If a contract requires the celebrity to pay the manager 10 percent of the celebrity's earnings for performing at a show, then the contract is enforceable if the celebrity performs at the show.
Good Faith
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A contract is enforceable only if each party to the contract enters into the contract in good faith. Good faith is present if each party enters into a contract with an honest intention to act without taking unfair advantage of the other or honest intention to fulfill their promise to act. Good faith is not present if either party commits an intentional dishonest act by not fulfilling the obligation of the contract, misleading the other, entering into an agreement without the intention or ability to fulfill it, or violating basic standards of honesty. Standards of honesty are interpreted on a case-by-case basis by a judge who may refer to prior judicial interpretations.
No Violation of Public Policy
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Enforceable contracts must not violate public policy. If the actions involved in a contract are illegal, then the contract violates public policy, and it is not enforceable. For example, if a politician enters into a contract with an illegal drug cartel that compensates the politician for providing the cartel with a secure border passage, then the contract is not enforceable because the actions involved in the contract are illegal.
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