What establishes consent of both parties to form a contract?

The concept of contract formation hinges on the need for both parties to express their willingness to enter into a legal agreement, which is most fundamentally achieved through the process known as offer and acceptance. This involves one party proposing terms (the offer) and the other party agreeing to those terms (the acceptance). For a valid contract to exist, both elements must be present; the offer must be clear enough for the other party to understand and accept without ambiguity.

While mutual agreement is a broader term that encompasses the finality of consent between the parties, it is the specific mechanism of offer and acceptance that directly establishes that consent in a tangible way. Negotiation and dialogue can be part of the communication process leading up to an offer and acceptance but do not, in themselves, create binding obligations. Written documentation can provide evidence of the agreement, but the essential elements of contract formation—namely the offer and acceptance—must occur before any documentation takes place.