ABSTRACT
This chapter answers what conditions must be satisfied for a promise to be enforceable? Or, in other words, what constitutes a valid contract? The benchmark for an enforceable contract is a mutually beneficial transaction, which means that both the buyer and the seller profit from the transfer of the good or service in question. The use of the competitive market paradigm as the norm for contract law is based on the "invisible hand theorem", which says that when the market is competitive, all gains from trade will be exhausted and the allocation of resources will be efficient. The chapter examines two other possible reasons for invalidating a contract based on departures from the competitive paradigm. The first is the possibility that one of the parties did not enter the contract voluntarily; and the second is that there was incomplete information about some material aspect of the contract at the time it was signed.
