A contract is a legally enforceable agreement. Four elements must be present to form one:
- Offer, a definite promise to be bound on specified terms.
- Acceptance, unqualified agreement to those exact terms (a change is a counter-offer, not acceptance).
- Consideration, something of value exchanged by each side (a promise for a promise, money for work). A gratuitous promise is generally unenforceable.
- Intention to create legal relations, presumed in commercial dealings.
Terms come in two kinds. Express terms are stated by the parties (in writing or orally). Implied terms are read in by a court or statute even though unstated, for example an implied term that work be done in a good and workmanlike manner, or that goods be fit for purpose.
Memory hook, "OACI": Offer, Acceptance, Consideration, Intention. Miss one and there is no contract.
Some contracts must be in writing to be enforceable (e.g., guarantees, land dealings). Engineers should reduce scope, fees, and standard of care to writing, because the parol evidence rule generally bars using prior oral discussions to contradict a complete written contract.