A legal contract is a promise or set of promises that is enforceable under the law. In North America, the three most important aspects of a contract are offer, acceptance, and consideration.

“Offer” and “acceptance” seem pretty straightforward (although it's trickier than you might think), but the term “consideration” fools a lot of people.

“Consideration” is not required in most countries outside of common law systems (the United Kingdom, the US, Canada, Australia, New Zealand, and a few others). For a contract to have consideration there must be value given by both sides - either a promise or performance of a deed. If I promise to buy my son a boat for his graduation and I fail to do so, my promise is not enforceable because my son gave me nothing in return (this is known as a “gratuitous promise”). On the other hand, if I promise to give him a boat if he mows my lawn, and then I refuse to transfer the boat even after he mows my lawn, this could be enforceable even if the value of the boat greatly exceeds the value his mow job. Courts are not concerned with the value of the consideration or whether it was a wise exchange, but only whether consideration exists at all.

There are several ways to have a contract declared void (treated as if it never existed at all) or voidable – among others, lack of legal intention, lack of legal capacity (a minor, for example), lack of genuine consent (in case of fraud, etc.), and illegal object (a contract for a hit man, for example).

Please keep in mind that the foregoing is greatly simplified - contract law can get quite complex. Stay tuned for Parts 2,3,4...