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theory was called the will theory of contract law because it focused onthe exercise of each party’s free will. The courts no longer asked if thecontract was fair; instead they pondered, “Did the parties really agreeto these terms?”One problem with the will theory is that it was difficult to knowwhat the parties were actually thinking when they entered into anagreement. Consequently, the courts studied actions and words todetermine if the parties reached a “meeting of the minds.” Gradually,this approach led to a search for certain fixed elements to contracts. Ifthese elements existed, the courts would hold that a contract existed.This approach became known as the formalist theory because it reliedon the form of the agreement.ELEMENTS OF ACONTRACTAn agreement is not a contractunless it contains thesix elements of contracts:offer, acceptance, genuineagreement, capacity, consideration,and legality. Ofthe six elements, which isthe most crucial to settingup a valid contract?The Elements of a ContractThe six elements of a contract, as shown in Figure 5.1, are offer,acceptance, genuine agreement, consideration, capacity, and legality.To be legally complete, a contract must include all six elements.Notice that the list does not include anything written. Not all contractshave to be in writing to be enforceable.An offer is a proposal by one party to another intended to createa legally binding agreement. An acceptance is the second party’sFigure 5.1ElementOfferAcceptanceGenuine AgreementConsiderationCapacityLegalityElements of a ContractDescriptionA proposal made by one party (the offeror) to another party (the offeree) indicatinga willingness to enter a contract.The agreement of the offeree to be bound by the terms of the offer.Offer and acceptance go together to create genuine agreement, or a meeting of theminds. Agreement can be destroyed by fraud, misrepresentation, mistake, duress, orundue influence.Consideration is the thing of value promised to one party in a contract in exchange forsomething else of value promised by the other party. The mutual exchange binds theparties together.The law presumes that anyone entering a contract has the legal capacity to do so.Minors are generally excused from contractual responsibility, as are mentallyincompetent and drugged or drunk individuals.Parties are not allowed to enforce contracts that involve illegal acts. Some illegalcontracts involve agreements to commit a crime or a tort. Others involve activitiesmade illegal by statutory law.108 Unit 2: Entering into Contracts