2. Formation of the contract

The formation of the contract is where the contractual journey begins; if no contract is formed, neither of the parties can be under any obligations. Therefore, it is very important to have an understanding of each part of a contract’s formation.

In order for a legally binding agreement to be formed, there are four basic requirements to be met:

These four sections operate together, but have distinct rules and you will need to understand each one to be able to understand the formation of a contract.

The initial offer and acceptance will form an agreement. This is not legally binding unless there is certainty, intention to create legal relations, and consideration. The sections following this introduction will explore each of the core requirements in turn, ensuring you have a comprehensive understanding of them and their relation to each other.

After completing the lessons on the four core requirements you should refer back to this introduction and check you have met all of the following goals and objectives:


The goals of this section will be for you:

  • To understand how a contract is formed
  • To understand each core concept of a contract
  • To understand the relationship between each core concept of a contract


  • To be able to understand the key terminology that relates to the formation of the contract
  • To be able to identify when a contract has been formed
  • To be able to identify whether the issue with a contract’s formation is with the offer, acceptance, certainty/intention or consideration