Parties enter into contracts attempting to control their future. Contracts exist to make business matters more predictable. Most contracts work out precisely as the parties intended because the parties fulfi ll their obligations.
Most—but not all. We will study contracts that have gone wrong. We look at these errant deals to learn how to avoid the problems they manifest.
A contract is a promise that the law will enforce. As we look more closely at the elements of contract law, we will encounter some intricate issues, but remember that we are usually interested in answering three basic questions of common sense, all relating to promises:
• Is it certain that the defendant promised to do something?
• If she did promise, is it fair to make her honor her word?
• If she did not promise, are there unusual reasons to hold her liable anyway?
In a bilateral contract, both parties make a promise. Suppose a producer says to Gloria, “I’ll pay you $2 million to star in my new romantic comedy, A Promise for a Promise, which we are shooting three months from now in Santa Fe.”
Gloria says, “It’s a deal.” Th at is a bilateral contract. Each party has made a promise to do something. Th e producer is now bound to pay Gloria $2 million, and Gloria is obligated to show up on time and act in the movie. Th e vast majority of contracts are bilateral contracts.
In a unilateral contract, one party makes a promise that the other party can accept only by doing something. Th ese contracts are less common. Suppose the movie producer says to Leo, “I’ll give you a hundred bucks if you mow my lawn this weekend.”
Leo is not promising to do it. If he mows the lawn, he has accepted the off er and is entitled to his hundred dollars. If he spends the weekend at the beach, neither he nor the producer owes anything.
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