302 . Contract Formation - Essential Factual Elements
[ Name of plaintiff ] claims that the parties entered into a contract. T o
prove that a contract was cr eated, [ 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];
3. That the parties agreed to the terms of the contract.
[When you examine whether the parties agr eed to the terms of the
contract, ask yourself if, under the cir cumstances, a reasonable person
would conclude, from the words and conduct of each party , that there
was an agreement. Y ou 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 201 1, June 2014
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 of fer and
acceptance. If neither of fer 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.
• W riting 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 .” ( Hebber d-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 & W ells (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 suf ficiently definite, or must call for such definite terms in
the acceptance, that the performance promised is reasonably certain.’ [Citation.]”
( W eddington Pr oductions, Inc. v . Flick (1998) 60 Cal.App.4th 793, 81 1 [71
Cal.Rptr .2d 265].)
• “Whether a contract is suf ficiently 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 suf fers a
prejudice. Although ‘either alone is suf ficient 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.’ ” ( Pr operty
California SCJL W One Corp. v . Leamy (2018) 25 Cal.App.5th 1 155, 1 165 [236
Cal.Rptr .3d 500], internal citations omitted.)
• “[T]he presumption of consideration under [Civil Code] section 1614 af fects 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 af firmative defense, lack of consideration must be alleged in answer to
the complaint.” ( National Farm W orkers 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 . W est Coast Quartz Corp. (2013) 221
CONTRACTS CACI No. 302
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 Ener gy
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.’ ” ( Mer ced
County Sheriff’ s Employees’ Assn. v . County of Mer ced (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 . Gr eat 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 W itkin, Summary of California Law (1 1th 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
27 California Legal Forms, Ch. 75, Formation of Contracts and Standar d
Contractual Pr ovisions , §§ 75.10, 75.1 1 (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
CACI No. 302 CONTRACTS
Page last reviewed May 2024
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