Contract Formation

Case Examples

• Offer and Acceptance: In Frankel v. United States, 118 Fed. Cl. 332, 335 (2014), aff'd, 842 F.3d 1246 (Fed. Cir. 2016), the plaintiff entered into a valid offer and acceptance when he began performance of tasks to complete a contest. The court stated that an offer is “the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.” Furthermore, “acceptance is the manifestation of assent to the terms thereof made by the offeree in a manner invited or required by the offer.” Id. It is essential to note that in the context of a competition or contest, offer and acceptance occur as soon as a party begins undertaking the tasks necessary to enter the contest.
• Consideration: Consideration is defined as the things of value exchanged to create a contract. Note that things do not need a monetary value to be consideration, but can instead be promises. A good example of these promises is an employment contract where the employer agrees to pay the employee a certain amount for hours worked or tasks completed in the future.
• Mutual Intent to be Bound: In Am. Eagle Outfitters v. Lyle & Scott Ltd., 584 F.3d 575, 582 (3d Cir. 2009), a trademark case regarding the parties’ use of a similar trademark, the court found that a contract existed as “in assessing intent, the object of inquiry is not the inner, subjective intent of the parties, but rather the intent a reasonable person would apprehend in considering the parties' behavior.”
• Capacity: Capacity is the legal ability of a party to form a contract. There is a presumption that parties over the age of 18 can engage in contract formation. The party seeking to prove lack of capacity must show that the party in question was under the influence of substances or had a medical condition that made it impossible for them to understand and consent to the contract.
• Meeting of the Minds: Meeting of the Minds is a mutual understanding of the key terms of a contract. In Pipeline Prods., Inc. v. Madison Companies, LLC, 446 F. Supp. 3d 733, 739 (D. Kan. 2020), a case about one company trying to poach another’s employees, the court noted that “there must be a fair understanding between them which normally accompanies mutual consent and the evidence must show with reasonable definiteness that the minds of the parties met upon the same manner and agreed upon the terms of the contract.”