California Civil Jury Instructions (CACI)

302. Contract Formation—Essential Factual Elements

[Name of plaintiff] claims that the parties entered into a contract. To prove that a contract was created, [name of plaintiff] must prove all of the following:

1. That the contract terms were clear enough that the parties could understand what each was required to do;

2. That the parties agreed to give each other something of value [a promise to do something or not to do something may have value]; and

3. That the parties agreed to the terms of the contract.

[When you examine whether the parties agreed to the terms of the contract, ask yourself if, under the circumstances, a reasonable person would conclude, from the words and conduct of each party, that there was an agreement. You may not consider the parties’ hidden intentions.]

If [name of plaintiff] did not prove all of the above, then a contract was not created.

New September 2003; Revised October 2004, June 2011

Directions for Use

This instruction should only be given if the existence of a contract is contested. If both parties agree that they had a contract, then the instructions relating to whether or not a contract was actually formed would not need to be given. At other times, the parties may be contesting only a limited number of contract formation issues. Also, some of these issues may be decided by the judge as a matter of law. Read the bracketed paragraph only if element 3 is read.

The elements regarding legal capacity and legal purpose are omitted from this instruction because these issues are not likely to be before the jury. If legal capacity or legal purpose is factually disputed then this instruction should be amended to add that issue as an element. Regarding legal capacity, the element could be stated as follows: “That the parties were legally capable of entering into a contract.” Regarding legal purpose, the element could be stated as follows: “That the contract had a legal purpose.”

The final element of this instruction would be given prior to instructions on offer and acceptance. If neither offer nor acceptance is contested, then this element of the instruction will not need to be given to the jury.

Sources and Authority

  • Civil Code section 1550 provides:

    It is essential to the existence of a contract that there should be:

    1. Parties capable of contracting;

    2. Their consent;

    3. A lawful object; and

    4. A sufficient cause or consideration.

  • Civil Code section 1556 provides: “All persons are capable of contracting, except minors, persons of unsound mind, and persons deprived of civil rights.”
  • The issue of whether a contract is illegal or contrary to public policy is a question of law. (Jackson v. Rogers & Wells (1989) 210 Cal.App.3d 336, 350 [258 Cal.Rptr. 454].)
  • “In order for acceptance of a proposal to result in the formation of a contract, the proposal ‘must be sufficiently definite, or must call for such definite terms in the acceptance, that the performance promised is reasonably certain.’ [Citation.]” (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 811 [71 Cal.Rptr.2d 265].)
  • Section 33(1) of the Restatement Second of Contracts provides: “Even though a manifestation of intention is intended to be understood as an offer, it cannot be accepted so as to form a contract unless the terms of the contract are reasonably certain.” Section 33(2) provides: “The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.”
  • Courts have stated that the issue of whether a contract is sufficiently definite is a question of law for the court. (Ladas v. California State Automobile Assn. (1993) 19 Cal.App.4th 761, 770, fn. 2 [23 Cal.Rptr.2d 810]; Ersa Grae Corp. v. Fluor Corp. (1991) 1 Cal.App.4th 613, 623 [2 Cal.Rptr.2d 288].)
  • Civil Code section 1605 defines “good consideration” as follows: “Any benefit conferred, or agreed to be conferred, upon the promisor, by any other person, to which the promisor is not lawfully entitled, or any prejudice suffered, or agreed to be suffered, by such person, other than such as he is at the time of consent lawfully bound to suffer, as an inducement to the promisor is a good consideration for a promise.”
  • Civil Code section 1614 provides: “A written instrument is presumptive evidence of consideration.” Civil Code section 1615 provides: “The burden of showing a want of consideration sufficient to support an instrument lies with the party seeking to invalidate or avoid it.”
  • In Rancho Santa Fe Pharmacy, Inc. v. Seyfert (1990) 219 Cal.App.3d 875, 884 [268 Cal.Rptr. 505], the court concluded that the presumption of consideration in section 1614 goes to the burden of producing evidence, not the burden of proof.
  • Lack of consideration is an affirmative defense and must be alleged in answer to the complaint. (National Farm Workers Service Center, Inc. v. M. Caratan, Inc. (1983) 146 Cal.App.3d 796, 808 [194 Cal.Rptr. 617].)
  • “Consideration consists not only of benefit received by the promisor, but of detriment to the promisee. . . . ‘It matters not from whom the consideration moves or to whom it goes. If it is bargained for and given in exchange for the promise, the promise is not gratuitous.’ ” (Flojo Internat., Inc. v. Lassleben (1992) 4 Cal.App.4th 713, 719 [6 Cal.Rptr.2d 99], internal citation omitted.)
  • “Consideration may be an act, forbearance, change in legal relations, or a promise.” (1 Witkin, Summary of California Law (10th ed. 2005) Contracts, § 202.)
  • Mutual consent is an essential contract element. (Civ. Code, § 1550.) Under Civil Code section 1565, “[t]he consent of the parties to a contract must be: 1. Free; 2. Mutual; and 3. Communicated by each to the other.” Civil Code section 1580 provides, in part: “Consent is not mutual, unless the parties all agree upon the same thing in the same sense.”
  • California courts use the objective standard to determine mutual consent: “[A plaintiff’s] uncommunicated subjective intent is not relevant. The existence of mutual assent is determined by objective criteria. The test is whether a reasonable person would, from the conduct of the parties, conclude that there was mutual agreement.” (Hilleary v. Garvin (1987) 193 Cal.App.3d 322, 327 [238 Cal.Rptr. 247], internal citations omitted; see also Roth v. Malson (1998) 67 Cal.App.4th 552, 557 [79 Cal.Rptr.2d 226].)
  • Actions as well as words are relevant: “The manifestation of assent to a contractual provision may be ‘wholly or partly by written or spoken words or by other acts or by failure to act.’ ” (Merced County Sheriff’s Employees’ Assn. v. County of Merced (1987) 188 Cal.App.3d 662, 670 [233 Cal.Rptr. 519] (quoting Rest. 2d Contracts, § 19).)
  • The surrounding circumstances can also be relevant in determining whether a binding contract has been formed. (California Food Service Corp., Inc. v. Great American Insurance Co. (1982) 130 Cal.App.3d 892, 897 [182 Cal.Rptr. 67].) “If words are spoken under circumstances where it is obvious that neither party would be entitled to believe that the other intended a contract to result, there is no contract.” (Fowler v. Security-First National Bank (1956) 146 Cal.App.2d 37, 47 [303 P.2d 565].)

Secondary Sources

1 Witkin, Summary of California Law (10th ed. 2005) Contracts, §§ 26, 50, 58, 116–255, 419, 420

13 California Forms of Pleading and Practice, Ch. 140, Contracts, §§ 140.10, 140.20–140.25 (Matthew Bender)

5 California Points and Authorities, Ch. 50, Contracts, § 50.350 et seq. (Matthew Bender)

27 California Legal Forms, Ch. 75, Formation of Contracts and Standard Contractual Provisions, §§ 75.10, 75.11 (Matthew Bender)

1 Matthew Bender Practice Guide: California Contract Litigation, Ch. 13, Attacking or Defending Existence of Contract—Absence of Essential Element, 13.03–13.17