CACI 302 Contract Formation—Essential Factual Elements

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.

Directions for Use

This instruction should only be given if the existence of a contract is contested. 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 before 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

Essential Elements of Contract. Civil Code section 1550.

Who May Contract. Civil Code section 1556.

Consent. Civil Code section 1565.

Mutual Consent. Civil Code section 1580.

Good Consideration. Civil Code section 1605.

Writing Is Presumption of Consideration. Civil Code section 1614.

Burden of Proof on Consideration. Civil Code section 1615.

“Whether parties have reached a contractual agreement and on what terms are questions for the fact finder when conflicting versions of the parties’ negotiations require a determination of credibility.” (Hebberd-Kulow Enterprises, Inc. v. Kelomar, Inc. (2013) 218 Cal.App.4th 272, 283 [159 Cal.Rptr.3d 869].)

“Whether a contract is illegal or contrary to public policy is a question of law to be determined from the circumstances of each particular case.” (Jackson v. Rogers & Wells (1989) 210 Cal.App.3d 336, 349–350 [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].)

“Whether a contract is sufficiently definite to be enforceable 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].)

“Consideration is present when the promisee confers a benefit or suffers a prejudice. Although ‘either alone is sufficient to constitute consideration,’ the benefit or prejudice’ “ ‘must actually be bargained for as the exchange for the promise.’ ” ’ ‘Put another way, the benefit or prejudice must have induced the promisor’s promise.’ It is established that ‘the compromise of disputes or claims asserted in good faith constitutes consideration for a new promise.’ ” (Property California SCJLW One Corp. v. Leamy (2018) 25 Cal.App.5th 1155, 1165 [236 Cal.Rptr.3d 500], internal citations omitted.)

“[T]he presumption of consideration under [Civil Code] section 1614 affects the burden of producing evidence and not the burden of proof.” (Rancho Santa Fe Pharmacy, Inc. v. Seyfert (1990) 219 Cal.App.3d 875, 884 [268 Cal.Rptr. 505].)

“Being an affirmative defense, lack of consideration 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].)

“ ‘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.)

“The failure to specify the amount or a formula for determining the amount of the bonus does not render the agreement too indefinite for enforcement. It is not essential that the contract specify the amount of the consideration or the means of ascertaining it.” (Moncada v. West Coast Quartz Corp. (2013) 221 Cal.App.4th 768, 778 [164 Cal.Rptr.3d 601].)

“ ‘An essential element of any contract is “consent.” [Citations.] The “consent” must be “mutual.” [Citations.] “Consent is not mutual, unless the parties all agree upon the same thing in the same sense.” ‘ ‘ “The existence of mutual consent is determined by objective rather than subjective criteria, the test being what the outward manifestations of consent would lead a reasonable person to believe. [Citation.] Accordingly, the primary focus in determining the existence of mutual consent is upon the acts of the parties involved.” ’ ” (Monster Energy Co. v. Schechter (2019) 7 Cal.5th 781, 789 [249 Cal.Rptr.3d 295, 444 P.3d 97], internal citations omitted.)

“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).)

“A letter of intent can constitute a binding contract, depending on the expectations of the parties. These expectations may be inferred from the conduct of the parties and surrounding circumstances.” (California Food Service Corp., Inc. v. Great American Insurance Co. (1982) 130 Cal.App.3d 892, 897 [182 Cal.Rptr. 67], internal citations omitted.)

“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 (11th ed. 2017) Contracts, § 116 et seq.
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