Am Jur 2d - Contracts § 1

I. In General, A. Definitions, § 1 - Contract

A contract has been defined as an agreement to do, or refrain from doing, a particular thing,[1] upon a sufficient consideration.[2] Similarly, a "contract" has been defined as an agreement, obligation, or legal tie by which a party binds itself, or becomes bound, expressly or impliedly, to pay a sum of money or to perform or omit to do some certain act or thing.[3] Also, a "contract" has been defined as a private, voluntary allocation by which two or more parties distribute specific entitlements and obligations.[4] A "contract" is an agreement between two or more parties that creates obligations that are legally enforceable by the contracting parties.[5] A "contract" is an agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law.[6] A "contract" is an agreement by two or more parties whereby obligations are created, modified, or extinguished.[7]

A contract is an obligation which arises from actual agreement of the parties manifested by words, oral or written, or by conduct.[8] The term "contract" has been held to include every description or agreement or obligation, whether verbal or written, by which one party becomes bound to another to pay a sum of money or to perform or omit to do a certain act.[9]

The Restatement defines the term "contract" as a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty,[10] and this definition has been adopted by some courts.[11] However, this has been criticized as a circular definition: it is the same as saying that a contract is a legally enforceable promise, but a promise is legally enforceable only if it is a contract.[12]

A contract is not a law, nor does it make law: it is the agreement plus the law that makes the ordinary contract an enforceable obligation.[13]

Caution:

The following types of contracts are subject in some respects to special rules that depend on their formal characteristics and differ from those governing contracts in general:[14]

  • contracts under seal

  • recognizances

  • negotiable instruments and documents

  • letters of credit

When used in its ordinary sense, the term "contract" implies enforceable obligations.[15] However, in popular speech, the word "contract" is frequently used as meaning the work done under a contract.[16]

Observation:

A contract is a verbal act that has a legal reality independent of the truth of any statement contained in it.[17]

The right to perform a contract and to receive its profits and the right to performance by the other party are property rights entitling each party to the fulfillment of the contract by performance.[18]

Under the Uniform Electronic Transactions Act, the term "contract" means the total legal obligation resulting from the parties' agreement as affected by the act and other applicable law.[19]

The term "contract" has a more specific and extended meaning than the terms "promise" or "agreement."[20] The existence of a contract is a question of fact.[21] Tallies or receipts[22] and invoices[23] are generally not contracts.

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1   Sims v. Bayside Capital, Inc., 327 Ga. App. 47, 755 S.E.2d 520 (2014) , cert. denied, (Sept. 8, 2014); J. B. Preston Co. v. Funkhouser, 261 N.Y. 140, 184 N.E. 737, 87 A.L.R. 459 (1933) , judgment aff'd, 290 U.S. 163, 54 S. Ct. 134, 78 L. Ed. 243 (1933) ; Mtge. Network, Inc. v. Ameribanc Mtge. Lending, L.L.C., 177 Ohio App. 3d 733, 2008-Ohio-4112, 895 N.E.2d 917 (10th Dist. Franklin County 2008) ; Gomes v. Hameed, 2008 OK 3, 184 P.3d 479 (Okla. 2008) .
 As to the definition of "agreement" under the Uniform Commercial Code, see Am. Jur. 2d, Commercial Code § 6 .

2   McCraw v. Llewellyn, 256 N.C. 213, 123 S.E.2d 575, 94 A.L.R.2d 914 (1962) .
 As to the necessity and sufficiency of consideration, generally, see §§ 101 to 162 .

3   Society of Roman Catholic Church of Diocese of Lafayette, Inc. v. Interstate Fire & Cas. Co., 126 F.3d 727, 47 Fed. R. Evid. Serv. 1406 (5th Cir. 1997) (applying Louisiana law) ; Kosmicki v. State, 264 Neb. 887, 652 N.W.2d 883 (2002) .

4   New Welton Homes v. Eckman, 830 N.E.2d 32 (Ind. 2005) .

5   West v. Shelby County Healthcare Corporation, 459 S.W.3d 33 (Tenn. 2014) .

6   Paris v. Faith Properties, Inc., 766 F. Supp. 2d 877, 267 Ed. Law Rep. 629 (N.D. Ind. 2011) (applying Indiana law) ; West American Ins. Co. v. Cates, 865 N.E.2d 1016 (Ind. Ct. App. 2007) .

7   Worley v. Chandler, 7 So. 3d 38 (La. Ct. App. 2d Cir. 2009) .

8   Armstrong v. Collins, 366 S.C. 204, 621 S.E.2d 368 (Ct. App. 2005) .

9   Terex Corp. v. Grim Welding Co., 58 Ohio App. 3d 80, 568 N.E.2d 739 (9th Dist. Summit County 1989) .

10   Restatement Second, Contracts § 1 .

11   Lempert v. Rice, 956 F. Supp. 2d 17 (D.D.C. 2013) , appeal dismissed, 618 Fed. Appx. 3 (D.C. Cir. 2015) , cert. denied, 136 S. Ct. 1465 (2016) (applying District of Columbia law) ; Willamette Management Associates, Inc. v. Palczynski, 134 Conn. App. 58, 38 A.3d 1212 (2012) ; Wellington Co., Inc. Profit Sharing Plan and Trust v. Shakiba, 180 Md. App. 576, 952 A.2d 328 (2008) ; D.T. v. St. Gabriel Consol. School, 2016-Ohio-784, 2016 WL 817040 (Ohio Ct. App. 1st Dist. Hamilton County 2016); Forest Glen Condominium Ass'n v. Forest Green Common Ltd. Partnership, 2006 PA Super 99, 900 A.2d 859 (2006) .

12   Baehr v. Penn-O-Tex Oil Corp., 258 Minn. 533, 104 N.W.2d 661 (1960) .

13   Cederstrand v. Lutheran Brotherhood, 263 Minn. 520, 117 N.W.2d 213 (1962) .

14   Restatement Second, Contracts § 6 .
 As to contracts under seal, generally, see Am. Jur. 2d, Seals §§ 1 et seq.
 As to recognizances, generally, see Am. Jur. 2d, Bail and Recognizance §§ 1 et seq.
 As to negotiable instruments and documents, generally, see Am. Jur. 2d, Bills and Notes §§ 1 et seq.
 As to letters of credit, generally, see Am. Jur. 2d, Letters of Credit §§ 1 et seq.

15   Plains Cotton Co-op. Ass'n v. Wolf, 553 S.W.2d 800 (Tex. Civ. App. Amarillo 1977) , writ refused n.r.e., (Jan. 11, 1978).

16   Independent Bridge Co., for Use of Ainsley v. Aetna Casualty & Surety Co., 316 Pa. 266, 175 A. 644, 96 A.L.R. 549 (1934) .

17   Kepner-Tregoe, Inc. v. Leadership Software, Inc., 12 F.3d 527, 40 Fed. R. Evid. Serv. 266 (5th Cir. 1994) .
 As to evidentiary rules concerning verbal acts, see Am. Jur. 2d, Evidence § 675 .

18   McDermott v. McDermott, 336 Ark. 557, 986 S.W.2d 843 (1999) .

19   Unif. Electronic Transactions Act § 2(4) .

20   Hanlon v. Hayes, 404 Ill. 362, 89 N.E.2d 51, 23 A.L.R.2d 154 (1949) .
 As to the definition of "promise," see § 3 .
 As to the definition of "agreement," see § 2 .

21   Master Palletizer Systems, Inc. v. T.S. Ragsdale Co., Inc., 725 F. Supp. 1525, 11 U.C.C. Rep. Serv. 2d 1125 (D. Colo. 1989) , aff'd, 937 F.2d 616 (10th Cir. 1991) (applying Colorado law) .

22   Agway, Inc. v. Brooks, 173 Vt. 259, 790 A.2d 438 (2001) .

23   In re C.W. Mining Co., 531 B.R. 862 (D. Utah 2015) .

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