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A contract is a voluntary arrangement between two or more parties that is enforceable by law as a
binding legal agreement. Contract is a branch of the law of obligations in jurisdictions of the civil law
tradition. Contract law concerns the rights and duties that arise from agreements.

A contract arises when the parties agree that there is an agreement. Formation of a contract generally
requires an offer, acceptance, consideration, and a mutual intent to be bound. Each party to a contract
must have capacity to enter the agreement. Minors, intoxicated persons, and those under a mental
affliction may have insufficient capacity to enter a contract. Some types of contracts may require
formalities, such as a memorialization in writing.

A voluntary, deliberate, and legally binding agreement between two or more competent parties.
Contracts are usually written but may be spoken or implied, and generally have to do with employment,
sale or lease, or tenancy.

A contractual relationship is evidenced by (1) an offer, (2) acceptance of the offer, and a (3) valid (legal
and valuable) consideration. Each party to a contract acquires rights and duties relative to the rights and
duties of the other parties. However, while all parties may expect a fair benefit from the contract
(otherwise courts may set it aside as inequitable) it does not follow that each party will benefit to an
equal extent.

A contract is a legally enforceable agreement between two or more parties. It may be oral or written. A
contract is essentially a set of promises. Typically, each party promises to do something for the other in
exchange for a benefit.

Elements of A Contract

1. Offer and acceptance: In a contract there must be at least two parties one of them making the offer
and the other accepting it. There must thus be an offer by one party and its acceptance by the other. The
offer when accepted becomes agreement.

2. Legal relationship: Parties to a contract must intend to constitute legal relationship. It arises when the
parties know that if any one of them fails to fulfil his part of the promise, he would be liable for the
failure of the contract. If there is no intention to create legal relationship, there is no contract between
parties. Agreements of a social or domestic nature which do not contemplate a legal relationship are not

3. Consensus-ad-idem: The parties to an agreement must have the mutual consent i.e. they must agree
upon the same thing and in the same sense. This means that there must be consensus ad idem (i.e.
meeting of minds).

4. Competency of parties: The parties to an agreement must be competent to contract. In other words,
they must be capable of entering into a contract.

According to Sec 11 of the Act, “Every person is competent to contract who is of the age of majority
according to the law to which he is subject to and who is of sound mind and is not disqualified from
contracting by any law to which he is subject.”
Thus, according to Section 11, every person with the exception of the following is competent to enter
into a contract:

(i) A minor,

(ii) A person of unsound mind, and

(iii) A person expressly declared disqualified to enter into a contract under any Law.

5. Free consent: Another essential of a valid contract is the consent of parties, which should be free.
Under Sec. 13, “Two or more parties are said to consent, when they agree upon the same thing in the
same sense.” Under Sec. 14, the consent is said to be free, when it is not induced by any of the
following:- (i) coercion, (ii) misrepresentation, (iii) fraud, (iv) undue influence, or (v) mistake.

6. Lawful consideration: Consideration is known as ‘something in return’. It is also essential for the
validity of a contract. A promise to do something or to give something without anything in return would
not be enforceable at law and, therefore, would not be valid. Consideration need not be in cash or in
kind. A contract without consideration is a ‘wagering contract’ or ‘betting’. Besides, the consideration
must also be lawful.

7. Lawful objects: According to Sec. 10, an agreement may become a valid-contract only, if it is for a
lawful consideration and lawful object. According to Sec. 23, the following considerations and objects are
not lawful:-

(i) If it is forbidden by law;

(ii) If it is against the provisions of any other law;

(iii) If it is fraudulent;

(iv) If it damages somebody’s person or property; or

(v) If it is in the opinion of court, immoral or against the public policy.

Thus, any agreement, if it is illegal, immoral, or against the public policy, cannot become a valid contract.

8. Agreement not expressly declared void: An agreement to become a contract should not be an
agreement which has been expressly declared void by any law in the country, as it would not be
enforceable at law. Under different sections of the Contract Act, 1872, the following agreements have
been said to be expressly void, viz :

(i) Agreements made with the parties having no contractual capacity, e.g. minor and person of unsound
mind (Sec. 11).

(ii) Agreements made under a mutual mistake of fact (Sec. 20).

(iii) Agreements with unlawful consideration or object (Sec. 23).

(iv) Agreements, whose consideration or object is unlawful in part (Sec. 24).

(v) Agreements having no consideration (Sec 25).

(vi) Agreements in restraint of marriage (Sec. 26).

(vii) Agreements in restraint of trade (Sec. 27).

(viii) Agreements in restraint of legal proceedings (Sec. 28).

(ix) Agreements, the meaning of which is uncertain (Sec. 29).

(x) Agreements by way of wager (Sec. 30). and

(xi) Agreements to do impossible acts (Sec. 56).

9. Certainty and possibility of performance: Agreements to form valid contracts must be certain, possible
and they should not be uncertain, vague or impossible. An agreement to do something impossible is void
under Sec. 56.

10. Legal formalities: The agreement may be oral or in writing. When the agreement is in writing it must
comply with all legal formalities as to attestation, registration. If the agreement does not comply with
the necessary legal formalities, it cannot be enforced by law.


In civil law jurisdictions, a nominate contract is a standardized contractual relationship that has a special
designation attached to it (e.g., purchase and sale, lease, loan, insurance), as opposed to innominate
contracts (which are not standardized and therefore have no set name).

Nominate contracts are those which have a particular name to distinguish them; as, purchase and sale,
hiring, partnership, loan for use, deposit, and the like.

Nominate contract is a contract distinguished by a particular name, such as sale, insurance, or lease. The
use of these terms determines some of the rules governing the contract and the contractual rights of the
parties without the need for special stipulations. Nominate contracts are generally classified into four
categories: (1) real, (2) oral, (3) literal, and (4) consensual. Real contracts arise from something done.
Oral contracts arise from something said, literal contracts arise from something written and consensual
contracts are formed from something agreed to.


In Roman & Civil law, innominate contract refers to a contract which is not classifiable under any
particular name. In an innominate contract, the law supplies nothing in addition to the express
agreement of the parties.

An innominate contract is also termed as innominate real contract. In Roman & Civil law, innominate
contract refers to a contract which is not classifiable under any particular name. In an innominate
contract, the law supplies nothing in addition to the express agreement of the parties. This type of
contract was developed late in classical Roman law. The agreements did not become operational without
at least part performance, even if the agreements were reciprocal.

In History, a consensual contract is a contract that arises from the mere consensus of the parties. It does
not require the performance of any formal or symbolic acts to fix the obligation. Although the
consensual contract was known to the common law, it originated in Roman law.

In History, a consensual contract is a contract that arises from the mere consensus of the parties. It does
not require the performance of any formal or symbolic acts to fix the obligation. Although the
consensual contract was known to the common law, it originated in Roman law. In Roman law, this
embraced four kinds of contracts in which informal consent alone was sufficient: (1) an agency
agreement (2) a partnership agreement, (3) a sale, or (4) a letting or hiring. Consensual contracts require
no formalities to create them out of the Pact. Consent of the parties is more emphatically given in a
consensual contract. When the assent of parties is given, at once there forms a contract.


Mutuality of contract refers to the reciprocal understanding or agreement between parties. ... An
important part of a contract is mutuality, which states that both parties should be bound or neither
should be. However, this principle does not apply to unilateral contracts where there is only one party
who is bound.

The expectation that the standards and agreements within a contract made between two parties is
either upheld or rejected by both parties. One party cannot expect to have different rules or standards
than another held in contract with it.

Both contracting parties must be bound by the contract. Hence, the contract’s validity or compliance
cannot be left to the sole will of either party. This is the principle of mutuality.


1. The first exception is for unilateral contracts:

Mutuality of obligation is required only for bilateral contracts, that is, contracts in which a promise is
exchanged for another promise. A unilateral contract, where a promise is exchanged for an act, does not
require mutuality.

2. The second exception to the mutuality rule is made for limited promises:

If a real promise is made, no matter how limited the promise is, lack of mutuality is not a defense to
breach of the contract.

3. The third exception to the mutuality rule is for voidable contracts:

There are several grounds for making a contract voidable. One of them is if one of the parties is below
the age of majority, that is, 18 years old.

A voidable contract is a contract in which one party is bound while the other party can render the
contract void at any time. In this situation, the party that can void the contract can enforce the contract
against the other party but the other party cannot enforce the contract against him.

4. The fourth exception to the mutuality rule is for conditional promises:

A conditional promise is a promise that the promisor must perform but only if a specified condition
occurs. This is considered a real promise because, if the condition does occur, the promisor must
perform his promise and has thus limited his future options.

5. The fifth exception to the mutuality rule is for alternative promises:

An alternative promise is a promise in which the promisor can fulfill the promise by choosing between
two or more alternatives.

6. The sixth exception to the mutuality rule is for agreements which allow one party to determine a
material term of the contract:

Sometimes agreements leave open certain terms like price or quantity and allow one of the parties to
determine that term.

7. The seventh exception to the mutuality rule is made for implied promises:

An implied promise is a promise that is never actually expressed by the promisor, but can be implied
based on what the promisor and the promisee have contracted for.

This typically comes up in what is called “best effort” cases. For example, where one company agrees to
market another company’s product, the implied promise is that the company will use its best efforts to
market the product.

8. The eighth and final exception to the mutuality rule is for requirement and output contracts:

In a requirement contract, the buyer agrees to buy all of what he needs of a certain product from the


The basic principle of relativity of contracts is that contracts can only bind the parties who entered into
it, and cannot favor or prejudice a third person, even if he is aware of such contract and has acted with
knowledge thereof “Where there is no privity of contract, there is likewise no obligation or liability to
speak about.”

The principle of relativity provides that generally only the parties and their successors in interest are
bound by the contract. The exception is when the rights and obligations arising from the contract are not
transmissible by their nature, by stipulation, or by provision of law.


In law, perfection relates to the additional steps required to be taken in relation to a security interest in
order to make it effective against third parties or to retain its effectiveness in the event of default by the
grantor of the security interest.

Contracts are generally perfected by mere consent, which is the reason why there's such a thing as oral
contracts. It's a meeting of the minds between the parties: there's a definite offer by one person and
there's an absolute acceptance by another.
Contracts are generally perfected by mere consent, which is the reason why there's such a thing as oral
contracts. It's a meeting of the minds between the parties: there's a definite offer by one person and
there's an absolute acceptance by another.


1. Manifestation theory refers to a legal theory recognizing an injury as an insurable loss when injury is
manifested to an injured. Manifestation theory is also an insurance doctrine stating that an injury or
disease is covered under the policy, on a first appearance of symptoms of the covered injury or disease.
Manifestation theory is also known as exposure theory, actual-injury trigger, or triple trigger.

However, some injuries do not manifest themselves immediately between the occurrence of the event
and time when the injury becomes apparent. The consequences are referred to as delayed manifestation
injuries. A delayed manifestation injury is not recognized under manifestation theory and hence
coverage cannot be provided under insurance policy.

Manifestation theory states that an insurance coverage applies under a policy if the property damage
manifests during the policy period, regardless of when the act from which it resulted occurred.

2. Reception theory is a version of reader response literary theory that emphasizes each particular
reader's reception or interpretation in making meaning from a literary text. Reception theory is generally
referred to as audience reception in the analysis of communications models.

Reception theory. When the offeror receives the acceptance – applies to contracts concluded via data
messages. Contract is conluded when the data message containing the acceptance enters the
information system used by the addressee, and is capable of being retrieved and processed. Place of
conclusion is where the person to whom is communicated usually resides or does business.

3. Expedition theory. When the acceptance is dispatched to the offeror. This applies in SA Law only to
real postal contracts.

Expedition theory – Contract is perfected from the moment the acceptance is declared or made even if
not made known to the offeror.

4. Cognition theory – Contract is perfected from the moment the acceptance comes to the knowledge of
the offeror.


French term meaning stipulation for others, or stipulation in favour of other parties

It is a stipulation in a contract clearly and deliberately conferring a benefit upon a third person who has
the rightto demand its fulfilment, provided he communicated his acceptance of the benefit to the
obligor before itsrevocation by the obligee or the original parties.

It is also an exception to the general rule of relativity, one of the characteristics of a contract, stating
thatcontracts take effect only between parties, their assigns and heirs. (Civil Code, Art. 1311


In contract law, an offer is a promise in exchange for performance by another party. An offer can be
revoked or terminated under certain conditions.
A explicit proposal to contract which, if accepted, completes the contract and binds both the person that
made the offer and the person accepting the offer to the terms of the contract.


Offer given in response to an offer. It implies rejection of the original offer and puts the ball back in the
court of the original offerer who has three options: to (1) accept it, expressly (by replying) or by
implication (by not replying), (2) issue another (counter-counter) offer, or (3) reject it expressly. No
binding contract can be created until one party accepts the other's offer. Counter offers come in many
guises; a seller's acknowledgment (with estimated delivery dates) of a purchase order may, in fact,
constitute a counter-offer.

A counteroffer is a proposal that is made as a result of an undesirable offer. A counteroffer revises the
initial offer and makes it more desirable for the person making the new offer. This type of offer permits a
person to decline a previous offer and allows offer negotiations to continue.


An offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of either party
before acceptance is conveyed.

1. Civil Interdiction – mandatory accessory penalty deemed imposed whenever the sentence rendered is
within the range of reclusion temporal to death. If the latter is not executed by reason of commutation
or pardon.

2. Insanity – legal term for mental disorder; disease or defect of the brain.

3. Insolvency – inability or the lack of means to pay one’s debt.


1. Unemancipated Minors. – minors below 18 years of age. There are no more unemancipated minors
above 18 since the legal age was reduced from 21 to 18. Emancipation by marriage and parental
concession had already been eliminated. Children below 18 by themselves being minors cannot enter
into valid contracts. However, If misrepresented his age on the contract by stating of his age, and other
party was misled, the contract shall be binding upon him on the basis of estoppel.

2. Insane Or Demented Persons. – When a person is insane or demented, his is detached from reality. He
does not know what he is doing. He cannot act with legal effects. Consequently, he cannot enter into
valid contracts. During lucid intervals, as may happen in rare cases, they may enter into valid contracts
because at this moment, they are sane and capable of knowing what they are doing.

3. Deaf-Mutes. – Not all deaf-mutes are disqualified to give consent to contracts. Only those who do not
know how to write are disqualified.


1. Proposal and Acceptance:

When one person signifies to another his willingness to do or abstain from doing anything with a view to
obtaining the assent of that other to such act or abstinence he is said to make a proposal.

The first step towards creating a contract is that one person shall signify or make a proposal or offer to
the other, with a view to obtaining the acceptance of that another person to whom the offer is made. A
proposal when accepted becomes a promise.

When the person to whom the proposal is made signifies his assent thereof the proposal is said to be
accepted. A proposal when accepted becomes a promise.

2. Consideration:

When at the desire of the promisor the promisee or any other person has done or abstained from doing,
or does or abstains from doing or promises to do or to abstain from doing something such act or
abstinence or promise is called a consideration for the promise.

Every contract consists of two parts - (1) Promise and (2) Consideration for the promise. A promise is
often made in return for a promise for example a buyer realizes the goods for the price. Price for goods is
therefore, consideration here. Consideration is the cause of the promise. It is the most essential element
of the contract. As a general rule, agreement without consideration is void. The promise for a promise in
return is consideration.

An agreement is a contract, only if it is made for a lawful consideration and with a lawful object.

The consideration or object of an agreements is unlawful if —

(1) it is forbidden by law; or

(2) is of such a nature that, if permitted it would defeat the provisions of any laws
(3) is fraudulent; or
(4) involves or implies injury to the person or property of another
(5) the court regards it as immoral or opposed to public policy

In each of these cases, the consideration or object of an agreement is said to be unlawful. Every
agreement if which the object or consideration is unlawful is void.

3. Capacity of parties to contract – Competent parties:

Every person is competent to contract who is of the age of majority according to the law to which he is
subject, and who is of sound mind, and is not disqualified from contacting by any law to which he is

4. Free Consent:

Parties to a contract must give their consent. The parties must be ad idem, for example both the parties
must agree upon the same thing in the same sense. Two or more persons are said to consent when they
agree upon the same thing in the same sense. Mere consent is not enough. Consent of parties must be
free, for example it must not have been obtained (1) coercion, (2) undue influence, (3) fraud, (4)
misrepresentation, or (5) mistake.

5.An agreement must not be expressly declared to be void :

A void agreement is not enforceable by law (Sec 2(g)). It has no legal sanctity. It does not give rise to any
rights and obligations. Various agreements are expressly declared void under the Act.

6. Writing and registration:

Oral contract is a valid contact. However the contract must be in writing and registered, if so required by
any law, for example, gift, mortgage, sale, lease under the Transfer of Property Act 1882, Memorandum
and Articles of Association of a Company under the Indian Companies Act, contracts under sub sections
(10 and 3) of section 25 of the Indian Contract Act, etc. Documents specified under section 17 of the
Indian Registration Act, 1908, are required to be registered.

No particular form of writing is required to constitute a contract. Intentions of the parties to enter into a
particular contract and to give effect to it must be manifest in it, in order to constitute a valid contract.

7. Legal relationship:

Agreements which create legal relations or are capable of creating legal relations are contracts, for
example, an invitation to a dinner does not create any legal relation and therefore is not a contract.

8. Certainty:

The terms of a contract should be clear. In other words, the contract must not be vague. Contracts which
are vague cannot be enforced.

9. Possibility of performance:

Contracts based on impossibility of performance are not valid. The contracts must be capable of being

10. Enforceable by Law:

A contract in order to be valid must be enforceable by law which element distinguishes agreement and
contract. It is enforceable by law it is contract otherwise it is an agreement. The aggrieved party should
be able to obtain relief through law in the event of breach of contract. An agreement can also be inferred
from correspondence exchanged between the parties.


A void contract cannot be enforced by law. Void contracts are different from voidable contracts, which
are contracts that may be (but not necessarily will be) nullified. However, when a contract is being
written and signed, there is no automatic mechanism available in every situation that can be utilized to
detect the validity or enforceability of that contract. Practically, a contract can be declared to be void by
a court of law.

Invalid Contract

There are several situations where a contract becomes invalid or unenforceable. Invalid Contractsthose
that do not contain any one of the three elements, do not satisfy the terms or are illegal.

Contracts may become invalid under the following circumstances:

* If the contract is against public policy

* If the contract is illegal

* If the offer/acceptance/consideration calls for action that violates the law – such as gambling, robbery,

* If the purpose of the contract is illegal

Contracts may be deemed unenforceable due to a variety of reasons. Sometimes, the contract is not
legal but against public policy. For example, a clause in an employment contract to not compete in the
organization is against public policy. Employers may do this to ensure that employees due not leave the
organization. However, this restricts the right of free employment for an individual.

Breach of contract cannot be charged if the contract, itself, is invalid. In such cases, the suing party is not
awarded any damages as the contract is considered unenforceable.

* Made by incompetent parties (e.g., under the age of consent, incapacitated)

* Has a material bilateral mistake

* Has unlawful consideration (e.g., promise of sex)

* Concerns an unlawful object (e.g., heroin)

* Has no consideration on one side

* Restricts a person from marrying or remarrying

* Restricts trade

* Restricts legal proceedings

* Has material uncertain terms

* Incorporates a wager, gamble, or bet

* Contingent upon the happening of an impossible event

* Requires the performance of impossible acts


1595. The object of a contract is the thing which it is agreed, on the part of the party receiving the
consideration, to do or not to do.

1596. The object of a contract must be lawful when the contract is made, and possible and
ascertainable by the time the contract is to be performed.

1597. Everything is deemed possible except that which is impossible in the nature of things.

1598. Where a contract has but a single object, and such object is unlawful, whether in whole or in part,
or wholly impossible of performance, or so vaguely expressed as to be wholly unascertainable, the entire
contract is void.
1599. Where a contract has several distinct objects, of which one at least is lawful, and one at least is
unlawful, in whole or in part, the contract is void as to the latter and valid as to the rest.

#14. Most contracts can be either written or oral and still be legally enforceable, but some agreements
must be in writing in order to be binding. However, oral contracts are very difficult to enforce because
there's no clear record of the offer, consideration, and acceptance. Still, it's important to understand
which types of contracts absolutely must be written in order to be valid.


A contract of sale is a legal contract. It is a contract for the exchange of goods, services or property that
are the subject of exchange from seller (or vendor) to buyer (or purchaser) for an agreed upon value in
money (or money equivalent) paid or the promise to pay same. It is a specific type of legal contract.

An obvious ancient practice of exchange, in many common-law jurisdictions it is now governed by

statutory law. See commercial law.

Contracts for sale involving goods are governed by Article 2 of the Uniform Commercial Code in most
United States and Canadian jurisdictions, however in Quebec such contracts are governed by the Civil
Code of Quebec as a nominate contract in the book on the law of obligations. In Muslim countries it is
governed by Islamic Law ( sharia )

A contract of sale lays out the terms of a transaction of goods or services, identifying the goods sold,
listing delivery instructions, inspection period, any warranties and details of payment.

A contract by which one of the contracting parties, called the "seller," enters into an obligation to the
other to cause him to have freely, by a title of proprietor, a thing, for the price of a certain sum of money,
which the other contracting party, called the "buyer," on his part obliges himself to pay.

Formal contract by which a seller agrees to sell and a buyer agrees to buy, under certain terms and
conditions spelled out in writing in the document signed by both parties. An invoice, for example, is a
contract of sale. Also called agreement of sale, contract for sale, sale agreement, or sale contract.


Absolute sale is a sale in which property passes to a buyer upon completion of an agreement or bargain
between the parties. An absolute sale takes place without conditions. The title is transferred by the seller
to the buyer without any restrictions other than payment of an agreed-upon amount of money. A deed
of absolute sale is an agreement between a seller and a purchaser legalizing purchase of a property.

A transfer of ownership of a property from a buyer to a seller in a business transaction after the agreed
upon payments have been made. There are no other restrictions applied to the transfer other than the


The sale of goods according to a contract containing conditions, typically that ownership does not pass
to the buyer until after a set time, usually after payment of the last installment of the purchase price,
although the buyer has possession and is committed to acquiring ownership.
A sale in which the title of a property remains with the seller until some condition is met, as the payment
of the full purchase price.

Arrangement where a buyer takes possession of an item, but its title and right of repossession remains
with the seller until the buyer pays the full purchase price (usually in installments stretched over months
or years). Common type of agreement used in the financing of machinery and equipment, and real
estate. Also called conditional sale contract.


Sales objective can be defined as a part of a company’s marketing plan where common goals are
identified by the company’s marketing team like revenue targets, distribution partners, profit margins,
targeted demographics and advertising and work on it. The plans are outlined through a discussion
which happens in sales meetings insuring understanding between the sales teams and the members of
marketing team of a company.

What may be objects of sale?

1. Existing Goods – owned/ possessed by seller at the time of perfection

2. Future Goods – goods to be manufactured, raised, acquired by seller after perfection of the contract
or whose acquisition by seller depends upon a contingency (Art. 1462)

Note: Sale of future goods is valid only as an executory contract to be fulfilled by the acquisition &
delivery of goods specified.

3. Sale of Undivided Interest or Share

a. Sole owner may sell an undivided interest. (Art. 1463) Ex. A fraction or percentage of such property

b. Sale of an undivided share in a specific mass of fungible goods makes the buyer a co-owner of the
entire mass in proportion to the amount he bought. (Art. 1464)

c. A co--owner cannot sell more than his share (Yturralde v. CA)

4. Sale of Things in Litigation

a. Sale of things under litigation is rescissible if entered into by the defendant , without the approval
of the litigants or the court (Art. 1381)

b. No rescission is allowed where the thing is legally in the possession of a 3rd person who did not
acted in bad faith.

5. Things subject to Resolutory Condition.

Ex. Things acquired under legal or conventional right of redemption, or subject to reserva troncal. (Art.

6. Indeterminate Quantity of Subject Matter

The fact that the quantity is not determinate shall not be an obstacle to the existence of the contract
provided it is possible to determine the same, without need of a new contract. (Art. 1349)


Barter is a system of exchange where goods or services are directly exchanged for other goods or
services without using a medium of exchange, such as money.

Barter is a system of exchange where goods or services are directly exchanged for other goods or
services without using a medium of exchange, such as money. It is distinguishable from gift economies in
many ways; one of them is that the reciprocal exchange is immediate and not delayed in time.

Trading in which goods or services are exchanged without the use of cash. Resorted-to usually in times of
high inflation or tight money, barter is now a common form of trading in deals such as offers to buy
surplus goods in exchange for advertising space or time. Advent of internet has transformed bartering
from largely person-to-person to mainly business-to-business exchange where items ranging from
manufacturing capacity to steel and paper are bartered across international borders on a daily basis.


In ordinary usage, price is the quantity of payment or compensation given by one party to another in
return for goods or services. In modern economies, prices are generally expressed in units of some form
of currency.

A value that will purchase a finite quantity, weight, or other measure of a good or service.

As the consideration given in exchange for transfer of ownership, price forms the essential basis of
commercial transactions. It may be fixed by a contract, left to be determined by an agreed upon formula
at a future date, or discovered or negotiated during the course of dealings between the parties involved.

In commerce, price is determined by what (1) a buyer is willing to pay, (2) a seller is willing to accept, and
(3) the competition is allowing to be charged. With product, promotion, and place of marketing mix, it is
one of the business variables over which organizations can exercise some degree of control.

It is a criminal offense to manipulate prices (see price fixing) in collusion with other suppliers, and to give
a misleading indication of price such as charging for items that are reasonably expected to be included in
the advertised, list, or quoted price.

Also called sale price and selling price.

Price is the quantity of payment or compensation given by one party to another in return for goods or


Three elements are needed to create a perfected contract: 1) the consent of the contracting parties; (2)
an object certain which is the subject matter of the contract; and (3) the cause of the obligation which is
established. Under the law on sales, a contract of sale is perfected when the seller, obligates himself, for
a price certain, to deliver and to transfer ownership of a thing or right to the buyer, over which the latter
agrees. From that moment, the parties may demand reciprocal performance.