Contract, Freedom of

A contract is an agreement between two or more parties that creates binding legal obligations. Freedom of contract is the right of individuals and organizations to create and enter into legally binding agreements with others, based on mutual consent. Freedom of contract is a fundamental principle of the common law legal system and one of the most basic civil liberties in the United States. The courts use an objective standard to determine whether parties have formed a contract. Contracts may be express or implied; the distinction lies merely in the mode of manifesting assent. The law presumes the validity of contracts, and courts are generally reluctant to invalidate them. The constitutional liberty-of-contract doctrine was employed by the US Supreme Court in the late nineteenth and early twentieth centuries to invalidate social and economic reform legislation. On this basis, maximum-hour and minimum-wage legislation was deemed inconsistent with liberty of contract.