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How does California law define a contract?

On Behalf of | Apr 19, 2023 | Contract Disputes

When two parties agree to do business together, they will likely enter into a contract or written agreement specifying the terms of their deal. Both sides will negotiate until they come up with terms they are both willing to follow.

Contracts are essential for business dealings, particularly when things do not go according to plan. If one party breaches the agreement, the other party may file a lawsuit against the breaching party to recover damages resulting from the breach.

Under California law, a contract must meet certain requirements to be considered valid. Some of these requirements include:

  • Offer and acceptance: One party makes an offer that another party accepts.
  • Consideration: Parties exchange something of value.
  • Capacity: Parties must have legal capacity to enter into the agreement.
  • Meeting of the minds: Parties agree to all material terms of the contract.
  • Definitive terms: Terms were not too vague or ambiguous.
  • In writing (in certain cases): A contract can be implied or written in California, unless it fits an exception under the statute of frauds that requires it to be in writing and signed.

Contracts are critical parts of all business dealings and must meet all legal requirements to be enforceable. If your contract has already been breached, it’s wise to seek out experienced professional help to determine if the breach was material.

In this context, “material” means that one party failed to meet their obligations under the contract to such a degree that the other is entitled to a remedy. This is something that can only be determined on a case-by-case basis.