Music Law I: Unit 2 – Introduction to Contract Law
WHAT IS A CONTRACT? “An agreement between two or more persons which creates an obligation to do or not to do a particular thing.” (Black’s Law Dictionary)
ELEMENTS OF A VALID CONTRACT
There are five elements which must be present in any valid contract:
• Two or more (legally) competent parties. o The parties can be complete idiots and still be legally competent. o Minors are not legally competent, but may still enter into binding commercial contracts, subject to the minor’s right to later disaffirm the contract in most cases. o Those who have been judicially declared incompetent cannot enter into binding contracts without the approval of the court or of a court-appointed conservator or trustee. o An entity such as a corporation or LLC is a “person” under the law, and is competent to enter into contracts.
• Describable subject matter. o The contract must be about something. o That something may be tangible or intangible, but it must be something that can actually exist or which is capable of being brought into existence. o If it can’t be described, it cannot be the subject matter of a contract.
• Lawful consideration. o Consideration is the value exchanged between parties to a contract… the inducement to enter into a contract. o The value of the consideration is a subjective perception of the party who is to receive it. o The consideration must be “lawful.” That is, it cannot consist of something which is itself proscribed by law, such as illegal substances or services.
• A “meeting of minds” (common understanding) o There must be a general, common understanding and agreement between the parties as to the subject matter, obligations, and consideration of the contract. o If one party believes and understands that he is negotiating and agreeing to sell a dozen apples… while the other party believes and understands he is negotiating and agreeing to purchase twelve Apple computers… there is no meeting of minds.
• Mutuality of obligation o Each party must be obligated under the contract terms to do – or to not do – some particular thing.

o A “contract” which imposes obligations on only one party, and requires nothing of the other party, is not a contract, but only a promise…
 Promises may be enforceable under certain circumstances, but they are still not contracts. o Some authorities list only four elements as being necessary for a valid contract by combining the “mutuality of obligation” element with the
“consideration” element, merging them into the single phrase, “Mutual, lawful consideration.”
• The “consideration,” and the “obligations,” and the “subject matter” of a contract are often one and the same. Sometimes they aren’t.
FORMS OF CONTRACTS
Contracts come in three forms:
• Written Contracts o Those in which the terms are expressly set forth in some fixed, tangible medium. o While that medium is almost always ink on paper, the legal definition of a
“writing” is much broader, and a “written” contract may be memorialized by other means (such as video- or audio-recordings) under certain circumstances. o “‘Writing’ means handwriting, typewriting, printing, photostating, photographing, photocopying, transmitting by electronic mail or facsimile, and every other means of recording upon any tangible thing, any form of communication or representation, including letters, words, pictures, sounds, or symbols, or combinations thereof, and any record thereby created, regardless of the manner in which the record has been stored.” --California Evidence
Code § 250
• Oral Contracts o As the name implies, these are agreements reached orally, without reducing the terms to a “writing.” o Note, however, that all of the five essential elements of a valid contract must still be present. o Oral contracts are sometimes erroneously referred to as “verbal” contracts. o Since “verbal” means “in words,” both written and oral contracts, each of which express their terms in words, are verbal contracts.