For the practicing engineer, contract law is an important field of study. An in-depth study of the entire field and its ramifications is incompatible with the purpose of this book and discussion will be limited to the various kinds of contracts and their interpretation, modification, rescission, performance, and breach.

The law of contracts undergoes a constant process of evolution because of changing customs and practices. Broad contract principles are subject to exceptions and modifications, but the rules and principles discussed here are, for the most part, those that have received general acceptance.

The definitions of “contract” put forth over years of slowly changing usage and convenience are legion. Section 1549 of the Civil Code of California (West 1982) defines a contract as “an agreement to do or not to do a certain thing.” The American Law Institute, in its Restatement of Contracts, second edition, 1981, section 1, declares that “a contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.”

Basically a contract is an understanding enforceable at law, made between two or more persons, by which rights are acquired by the one side to acts or forbearance on the other. To make an agreement that results in a contract, there must be an offer and an acceptance; and to the promises which stem from the offer and acceptance the law attaches a binding force of obligation. The contractual arrangement must involve competent parties and be based upon a legal consideration.