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In common law legal systems, a contract is an agreement having a lawful object entered into voluntarily by two or more parties, each of whom intends to create one or more legal obligations between them. The elements of a contract are "offer" and "acceptance" by "competent persons" having legal capacity who exchange "consideration" to create "mutuality of obligation."1
Proof of some or all of these elements may be done in writing, though contracts may be made entirely orally or by conduct. The remedy for breach of contract can be "damages" in the form of compensation of money or specific performance enforced through an injunction. Both of these remedies award the party at loss the "benefit of the bargain" or expectation damages, which are greater than mere reliance damages, as in promissory estoppel. The parties may be natural persons or juristic persons. A contract is a legally enforceable promise or undertaking that something will or will not occur. The word promise can be used as a legal synonym for contract,2 although care is required as a promise may not have the full standing of a contract, as when it is an agreement without consideration.
Contract law varies greatly from one jurisdiction to another, including differences in common law compared to civil law, the impact of received law, particularly from England in common law countries, and of law codified in regional legislation. Regarding Australian Contract Law for example, there are 40 relevant acts which impact on the interpretation of contract at the Commonwealth (Federal / national) level, and an additional 26 acts at the level of the state of NSW. In addition there are 6 international instruments or conventions which are applicable for international dealings, such as the United Nations Convention on Contracts for the International Sale of Goods.
Contract law is based on the principle expressed in the Latin phrase pacta sunt servanda, which is usually translated "agreements must be kept" but more literally means "pacts must be kept".4 Contract law can be classified, as is habitual in civil law systems, as part of a general law of obligations, along with tort, unjust enrichment, and restitution. The common law of contract originated with the writ of assumpsit, which was originally a tort action based on reliance.
Not all agreements are necessarily contractual, as the parties generally must have an intention to be legally bound (or the functional equivalent under the objective theory of contracts). In American English, a gentlemen's agreement is one which is not intended to be legally enforceable; the equivalent concept can be expressed an agreement "binding in honor only."
The professional practices solutions that are put in place to help with the design, implementation, and support of Contracts is referred to as the discipline of Contract Management.9 Enterprises that include entities such as for profit, nonprofit, not-for-profit, and government organizations, often establish and practice Contract Management in support of agreements that are made with vendors, partners, customers and other key stakeholders.
The activities that are part of Contract Management include but are not limited to things like assigning ownership and accountability for contracts, designing the structure of contracts, reviewing contracts, signing the contracts, filing the contracts, ensuring records retention of contracts, executing the contracts, ensuring support for the contracts, and governing all such activities for quality and adherence to such contracts.