ABSTRACT
This chapter concerns the formation of contracts. It considers the economic function of the rule that a promise, to be enforceable, must be supported by “consideration”; the requirement that there be an “offer” and an “acceptance”; whether there is a contract when there has been a unilateral or mutual mistake; unilateral contracts such as rewards; and implied contracts. The chapter also considers various issues concerning the validity and enforceability of contracts: procedural and substantive unconscionability; the economic function of the “holder in due course” rule, a rule that has been challenged as unconscionable; the controversy concerning the widespread use of standard form contracts; issues concerning allocation of risk; and the doctrines of impossibility and frustration of purpose. It examines the remedies for breach available to the injured party, money damages, and specific performance. The basic purpose of the law of contracts is to maximize the net benefits of exchange.
