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Contracts
are promises that the law will enforce. The law provides remedies if a promise is breached or recognizes the performance of
a promise as a duty. Contracts arise when a duty does or may come into existence, because of a promise made by one of the
parties. To be legally binding as a contract, a promise must be exchanged for adequate consideration. Adequate consideration
is a benefit or detriment which a party receives which reasonably and fairly induces them to make the promise/contract. For
example, promises that are purely gifts are not considered enforceable because the personal satisfaction the grantor of the
promise may receive from the act of giving is normally not considered adequate consideration. Certain promises that are not
considered contracts may, in limited circumstances, be enforced if one party has relied to his detriment on the assurances
of the otherparty.
Contracts
are mainly governed by state statutory and common (judge-made) law and private law. Private law principally includes the terms
of the agreement between the parties who are exchanging promises. This private law may override many of the rules otherwise
established by state law. Statutory law may require some contracts be put in writing and executed with particular formalities.
Otherwise, the parties may enter into a binding agreement without signing a formal written document.
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