Contracts is the body of law that by and large concerns voluntary agreements. Most people understand more or less what it means to enter into a contract. They realize that a contract is a bargain or agreement between two people （or more） to do some work, to buy or sell goods, to put up a building or tear one down, or to perform any one of countless¹ other activities, which one person or company promises to do in exchange for a counterpromise （usually a promise to pay money）.
　　Over a century ago（1861）, the great English jurist, Sir Henry Maine1, published a book called "Ancient Law". In a famous passage, Maine described the evolution of law over the centuries in "progressive" （that is, modernizing²） societies. The development went "from status to contract." What he meant was that legal relations in modern societies do not depend primarily on birth or caste； they depend on voluntary agreements. Elizabeth II is queen of England because of an accident of birth； but it is not an accident of birth that I make payments on a used yellow Plymouth； it is because I agreed to buy the car, on my own, as an adult, quite willingly.

　　In this sense, a regime of contract is fundamental to modern society. The whole economy —— more, the whole social system —— rests on it. But a regime of contract, a system of contract —— that is, an economy organized around voluntary agreements, governed mainly by the market- is not the same as the law of contracts as conventionally defined and taught in law schools. The law of contracts deals with only certain aspects of the market, and with certain kinds of agreement.

　　In legal terms, a contract is a promise （or set of promises） that the law protects and enforces. If I promise to deliver a carload of lumber³ and the buyer promises to pay me a certain price, and I do not deliver the lumber, I have "breached⁴" my contract. The buyer can sue me for damages —— if he chooses.

　　To make a valid⁵ contract, generally speaking, we need at least two parties； both have to have legal "capacity". A small child or an idiot cannot legally enter into a contract. One side must make an "offer"； the other side must "accept" it. "Offer" and "acceptance" are ordinary English words, but they have specialized⁶, technical meanings in law. A department store ad which announces an "offer" of a sewing machine for sale at a low price, as a "Thursday Only Special", is probably not making a legal offer. For one thing, there is no actual promise to sell the sewing machines. If, for example, the public gobbles up the stock, the store does not have to sell sewing machines to disappointed customers. An "offer", however, has to be legally a promise.

　　"Offer and acceptance" are promises, then, and they must be supported by a mysterious substance called "consideration". This is an intricate legal concept, hard to define in a sentence or two. The underlying⁷ idea, however, is fairly simple. Each party to a contract makes his promise in "consideration" of something which the other one promises. If I offer to sell my old car for $2,000, and the buyer accepts （promising⁸ to pay $2,000） the "consideration" on each side is clear. But if I promise to give my daughter a handful of diamonds because I love her, there is no "consideration" for my promise； she contributes nothing in return. （Love, alas⁹, does not count in the law of contracts. ） Here, if I fail to deliver（or die before I get a chance to） she has no right to sue me or my estate and claim the diamonds.

　　There are, of course, many other issues in the law of contracts. Samuel Willistons4's treatise¹⁰ on contract law —— the leader in the field for many years —— lumbers¹¹ through volume after volume. There is, however, some question whether all this lore¹² matters very much in the world of affairs. In classic article, the behavior of businessmen was explored in Wisconsin. It was found that many of them tended to avoid or sidestep （formal） contract law and contract doctrine¹³. They especially shied away from suing each other, even when they has a "good case" according to law. The reason was not at all mysterious.

　　Businessmen depended on each other； they lived and worked in networks of continuing relationships. A manufacturer might buy paper clips, pens, and office supplies from the same dealer¹⁴, year in and year out. Suing at the drop of the hat, or arguing excessively, or sticking up for abstract "rights", was disruptive； it tended to rip apart these valuable relationships. Also, there were norms, practices, and conceptions of honor and fairness that businessmen customarily followed. These were more subtle, more complicated, than the formal norms of the lawyers.

　　"Contract Law" is a standard first-year course in every law school. Yet it is probably less important a part of the living law than other fields which build on contract law or contract ideas. One of these fields is commercial law. This is the branch of law that concerns the buying and selling of goods, especially sales for credit and on the installment¹⁵ plan； it also deals with checks, promissory notes, and other "negotiable instruments". Another related field is the law of bankruptcy¹⁶ and creditor's rights, A bankrupt business or individual goes through a process that wipes the slate¹⁷ clean and allows the bankrupt to begin again. Even more important, the bankruptcy process is designed to ensure fairness to all of the creditors¹⁸. It tries to avoid a dog-eat-dog struggle over the assets of wrecked¹⁹ businesses and failed debtors²⁰. Bankruptcy law is a federal concern and is administered in the federal courts. Another rapidly growing field is the law of consumer protection. Still other fields concern themselves with special kinds of contract —— for example, contracts of insurance. Insurance contracts, like the insurance business, are quite heavily regulated and subject to distinctive²¹ rules.