A contract is generally a written or spoken agreement between persons or entities that includes obligations for each party (mutual obligations or mutuality) and enough specific information to be enforceable by either party (specificity).
The elements of forming an enforceable contract are generally (1) an offer made; (2) acceptance of the offer; and (3) consideration given by each party for the other party’s performance of the agreement—such as money in exchange for products or services, or mutual promises exchanged—which is often referred to as the bargained-for exchange.
The word "agreement" is often used interchangeably with the word "contract," and a document labeled as an agreement (with the necessary legal elements included) is as enforceable as a document labeled as a contract.
Contracts between governmental entities and contracts between private citizens or entities and governmental entities often have unique considerations such as the contracting or bidding process for government contracts and the governmental entity's legal liability for failing to meet its obligations under the terms of a contract (see the subtopic on sovereign immunity).
In Texas, a contract is recognized as a legally binding agreement when it meets certain criteria. These criteria include the presence of an offer, acceptance of that offer, and consideration, which is the value exchanged between the parties. This consideration can be in the form of money, services, or mutual promises. For a contract to be enforceable, it must also have specificity, meaning it contains enough detail about the obligations of each party. While the terms 'agreement' and 'contract' can be used interchangeably, the enforceability hinges on the presence of the necessary legal elements, not the title of the document. Contracts involving governmental entities in Texas are subject to additional rules, such as those governing the bidding process and considerations related to sovereign immunity, which can limit the government's liability for breach of contract.
