# Contract formation (Civ. Code §§ 1549-1692)

- Description: Contract formation (Civ. Code §§ 1549-1692)
- Source: https://leginfo.legislature.ca.gov/faces/codes.xhtml
- Pulled: 2026-05-13
- Sections: 23

> Verbatim text from the California Legislative Information website.
> Citation history and notes are preserved as published.

## Contents

- [Cal. Civ. Code § 1549 — Definition of contract](#sec-civ-1549)
- [Cal. Civ. Code § 1550 — Essential elements](#sec-civ-1550)
- [Cal. Civ. Code § 1556 — Who may contract](#sec-civ-1556)
- [Cal. Civ. Code § 1565 — Mutual consent essentials](#sec-civ-1565)
- [Cal. Civ. Code § 1568 — Apparent consent](#sec-civ-1568)
- [Cal. Civ. Code § 1571 — Fraud — types](#sec-civ-1571)
- [Cal. Civ. Code § 1572 — Actual fraud](#sec-civ-1572)
- [Cal. Civ. Code § 1573 — Constructive fraud](#sec-civ-1573)
- [Cal. Civ. Code § 1605 — Consideration defined](#sec-civ-1605)
- [Cal. Civ. Code § 1622 — Oral contracts valid except as noted](#sec-civ-1622)
- [Cal. Civ. Code § 1624 — Statute of frauds — writings required](#sec-civ-1624)
- [Cal. Civ. Code § 1636 — Interpretation goal](#sec-civ-1636)
- [Cal. Civ. Code § 1638 — Plain meaning](#sec-civ-1638)
- [Cal. Civ. Code § 1639 — Reduced to writing](#sec-civ-1639)
- [Cal. Civ. Code § 1641 — Whole-contract reading](#sec-civ-1641)
- [Cal. Civ. Code § 1644 — Ordinary meaning](#sec-civ-1644)
- [Cal. Civ. Code § 1647 — Circumstances considered](#sec-civ-1647)
- [Cal. Civ. Code § 1654 — Ambiguity construed against drafter](#sec-civ-1654)
- [Cal. Civ. Code § 1668 — Contracts exempting fraud / willful injury are void](#sec-civ-1668)
- [Cal. Civ. Code § 1670.5 — Unconscionability](#sec-civ-1670-5)
- [Cal. Civ. Code § 1689 — Rescission grounds](#sec-civ-1689)
- [Cal. Civ. Code § 1691 — Rescission procedure](#sec-civ-1691)
- [Cal. Civ. Code § 1692 — Restoration on rescission](#sec-civ-1692)

<a id="sec-civ-1549"></a>
## Cal. Civ. Code § 1549 — Definition of contract

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1549.

A contract is an agreement to do or not to do a certain thing.

*(Enacted 1872.)*

<a id="sec-civ-1550"></a>
## Cal. Civ. Code § 1550 — Essential elements

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1550.

It is essential to the existence of a contract that there should be:

1. Parties capable of contracting;

2. Their consent;

3. A lawful object; and,

4. A sufficient cause or consideration.

*(Enacted 1872.)*

<a id="sec-civ-1556"></a>
## Cal. Civ. Code § 1556 — Who may contract

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1556.

All persons are capable of contracting, except minors, persons of unsound mind, and persons deprived of civil rights.

*(Enacted 1872.)*

<a id="sec-civ-1565"></a>
## Cal. Civ. Code § 1565 — Mutual consent essentials

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1565.

The consent of the parties to a contract must be:

1. Free;

2. Mutual; and,

3. Communicated by each to the other.

*(Enacted 1872.)*

<a id="sec-civ-1568"></a>
## Cal. Civ. Code § 1568 — Apparent consent

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1568.

Consent is deemed to have been obtained through one of the causes mentioned in the last section only when it would not have been given had such cause not existed.

*(Enacted 1872.)*

<a id="sec-civ-1571"></a>
## Cal. Civ. Code § 1571 — Fraud — types

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1571.

Fraud is either actual or constructive.

*(Enacted 1872.)*

<a id="sec-civ-1572"></a>
## Cal. Civ. Code § 1572 — Actual fraud

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1572.

Actual fraud, within the meaning of this Chapter, consists in any of the following acts, committed by a party to the contract, or with his connivance, with intent to deceive another party thereto, or to induce him to enter into the contract:

1. The suggestion, as a fact, of that which is not true, by one who does not believe it to be true;

2. The positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;

3. The suppression of that which is true, by one having knowledge or belief of the fact;

4. A promise made without any intention of performing it; or,

5. Any other act fitted to deceive.

*(Enacted 1872.)*

<a id="sec-civ-1573"></a>
## Cal. Civ. Code § 1573 — Constructive fraud

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1573.

Constructive fraud consists:

1. In any breach of duty which, without an actually fraudulent intent, gains an advantage to the person in fault, or any one claiming under him, by misleading another to his prejudice, or to the prejudice of any one claiming under him; or,

2. In any such act or omission as the law specially declares to be fraudulent, without respect to actual fraud.

*(Enacted 1872.)*

<a id="sec-civ-1605"></a>
## Cal. Civ. Code § 1605 — Consideration defined

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1605.

Any benefit conferred, or agreed to be conferred, upon the promisor, by any other person, to which the promisor is not lawfully entitled, or any prejudice suffered, or agreed to be suffered, by such person, other than such as he is at the time of consent lawfully bound to suffer, as an inducement to the promisor, is a good consideration for a promise.

*(Enacted 1872.)*

<a id="sec-civ-1622"></a>
## Cal. Civ. Code § 1622 — Oral contracts valid except as noted

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1622.

All contracts may be oral, except such as are specially required by statute to be in writing.

*(Enacted 1872.)*

<a id="sec-civ-1624"></a>
## Cal. Civ. Code § 1624 — Statute of frauds — writings required

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1624.

(a) The following contracts are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party’s agent:

(1) An agreement that by its terms is not to be performed within a year from the making thereof.

(2) A special promise to answer for the debt, default, or miscarriage of another, except in the cases provided for in Section 2794.

(3) An agreement for the leasing for a longer period than one year, or for the sale of real property, or of an interest therein; such an agreement, if made by an agent of the party sought to be charged, is invalid, unless the authority of the agent is in writing, subscribed by the party sought to be charged.

(4) An agreement authorizing or employing an agent, broker, or any other person to purchase or sell real estate, or to lease real estate for a longer period than one year, or to procure, introduce, or find a purchaser or seller of real estate or a lessee or lessor of real estate where the lease is for a longer period than one year, for compensation or a commission.

(5) An agreement that by its terms is not to be performed during the lifetime of the promisor.

(6) An agreement by a purchaser of real property to pay an indebtedness secured by a mortgage or deed of trust upon the property purchased, unless assumption of the indebtedness by the purchaser is specifically provided for in the conveyance of the property.

(7) A contract, promise, undertaking, or commitment to loan money or to grant or extend credit, in an amount greater than one hundred thousand dollars ($100,000), not primarily for personal, family, or household purposes, made by a person engaged in the business of lending or arranging for the lending of money or extending credit. For purposes of this section, a contract, promise, undertaking, or commitment to loan money secured solely by residential property consisting of one to four dwelling units shall be deemed to be for personal, family, or household purposes.

(b) Notwithstanding paragraph (1) of subdivision (a):

(1) An agreement or contract that is valid in other respects and is otherwise enforceable is not invalid for lack of a note, memorandum, or other writing and is enforceable by way of action or defense, provided that the agreement or contract is a qualified financial contract as defined in paragraph (2) and one of the following apply:

(A) There is, as provided in paragraph (3), sufficient evidence to indicate that a contract has been made.

(B) The parties thereto by means of a prior or subsequent written contract, have agreed to be bound by the terms of the qualified financial contract from the time they reached agreement (by telephone, by exchange of electronic messages, or otherwise) on those terms.

(2) For purposes of this subdivision, a “qualified financial contract” means an agreement as to which each party thereto is other than a natural person and that is any of the following:

(A) For the purchase and sale of foreign exchange, foreign currency, bullion, coin, or precious metals on a forward, spot, next-day value or other basis.

(B) A contract (other than a contract for the purchase of a commodity for future delivery on, or subject to the rules of, a contract market or board of trade) for the purchase, sale, or transfer of any commodity or any similar good, article, service, right, or interest that is presently or in the future becomes the subject of a dealing in the forward contract trade, or any product or byproduct thereof, with a maturity date more than two days after the date the contract is entered into.

(C) For the purchase and sale of currency, or interbank deposits denominated in United States dollars.

(D) For a currency option, currency swap, or cross-currency rate swap.

(E) For a commodity swap or a commodity option (other than an option contract traded on, or subject to the rules of, a contract market or board of trade).

(F) For a rate swap, basis swap, forward rate transaction, or an interest rate option.

(G) For a security-index swap or option, or a security or securities price swap or option.

(H) An agreement that involves any other similar transaction relating to a price or index (including, without limitation, any transaction or agreement involving any combination of the foregoing, any cap, floor, collar, or similar transaction with respect to a rate, commodity price, commodity index, security or securities price, security index, other price index, or loan price).

(I) An option with respect to any of the foregoing.

(3) There is sufficient evidence that a contract has been made in any of the following circumstances:

(A) There is evidence of an electronic communication (including, without limitation, the recording of a telephone call or the tangible written text produced by computer retrieval), admissible in evidence under the laws of this state, sufficient to indicate that in the communication a contract was made between the parties.

(B) A confirmation in writing sufficient to indicate that a contract has been made between the parties and sufficient against the sender is received by the party against whom enforcement is sought no later than the fifth business day after the contract is made (or any other period of time that the parties may agree in writing) and the sender does not receive, on or before the third business day after receipt (or the other period of time that the parties may agree in writing), written objection to a material term of the confirmation. For purposes of this subparagraph, a confirmation or an objection thereto is received at the time there has been an actual receipt by an individual responsible for the transaction or, if earlier, at the time there has been constructive receipt, which is the time actual receipt by that individual would have occurred if the receiving party, as an organization, had exercised reasonable diligence. For the purposes of this subparagraph, a “business day” is a day on which both parties are open and transacting business of the kind involved in that qualified financial contract that is the subject of confirmation.

(C) The party against whom enforcement is sought admits in its pleading, testimony, or otherwise in court that a contract was made.

(D) There is a note, memorandum, or other writing sufficient to indicate that a contract has been made, signed by the party against whom enforcement is sought or by its authorized agent or broker.

For purposes of this paragraph, evidence of an electronic communication indicating the making in that communication of a contract, or a confirmation, admission, note, memorandum, or writing is not insufficient because it omits or incorrectly states one or more material terms agreed upon, as long as the evidence provides a reasonable basis for concluding that a contract was made.

(4) For purposes of this subdivision, the tangible written text produced by telex, telefacsimile, computer retrieval, or other process by which electronic signals are transmitted by telephone or otherwise shall constitute a writing, and any symbol executed or adopted by a party with the present intention to authenticate a writing shall constitute a signing. The confirmation and notice of objection referred to in subparagraph (B) of paragraph (3) may be communicated by means of telex, telefacsimile, computer, or other similar process by which electronic signals are transmitted by telephone or otherwise, provided that a party claiming to have communicated in that manner shall, unless the parties have otherwise agreed in writing, have the burden of establishing actual or constructive receipt by the other party as set forth in subparagraph (B) of paragraph (3).

(c) This section does not apply to leases subject to Division 10 (commencing with Section 10101) of the Commercial Code.

(d) An electronic message of an ephemeral nature that is not designed to be retained or to create a permanent record, including, but not limited to, a text message or instant message format communication, is insufficient under this title to constitute a contract to convey real property, in the absence of a written confirmation that conforms to the requirements of subparagraph (B) of paragraph (3) of subdivision (b).

*(Amended by Stats. 2014, Ch. 107, Sec. 2. (AB 2136) Effective January 1, 2015.)*

<a id="sec-civ-1636"></a>
## Cal. Civ. Code § 1636 — Interpretation goal

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1636.

A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.

*(Enacted 1872.)*

<a id="sec-civ-1638"></a>
## Cal. Civ. Code § 1638 — Plain meaning

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1638.

The language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity.

*(Enacted 1872.)*

<a id="sec-civ-1639"></a>
## Cal. Civ. Code § 1639 — Reduced to writing

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1639.

When a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible; subject, however, to the other provisions of this Title.

*(Enacted 1872.)*

<a id="sec-civ-1641"></a>
## Cal. Civ. Code § 1641 — Whole-contract reading

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1641.

The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other.

*(Enacted 1872.)*

<a id="sec-civ-1644"></a>
## Cal. Civ. Code § 1644 — Ordinary meaning

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1644.

The words of a contract are to be understood in their ordinary and popular sense, rather than according to their strict legal meaning; unless used by the parties in a technical sense, or unless a special meaning is given to them by usage, in which case the latter must be followed.

*(Enacted 1872.)*

<a id="sec-civ-1647"></a>
## Cal. Civ. Code § 1647 — Circumstances considered

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1647.

A contract may be explained by reference to the circumstances under which it was made, and the matter to which it relates.

*(Enacted 1872.)*

<a id="sec-civ-1654"></a>
## Cal. Civ. Code § 1654 — Ambiguity construed against drafter

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1654.

In cases of uncertainty not removed by the preceding rules, the language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist.

*(Amended by Stats. 1982, Ch. 1120, Sec. 1.)*

<a id="sec-civ-1668"></a>
## Cal. Civ. Code § 1668 — Contracts exempting fraud / willful injury are void

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1668.

All contracts which have for their object, directly or indirectly, to exempt any one from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.

*(Enacted 1872.)*

<a id="sec-civ-1670-5"></a>
## Cal. Civ. Code § 1670.5 — Unconscionability

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1670.5.

(a) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.

(b) When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect to aid the court in making the determination.

*(Added by Stats. 1979, Ch. 819.)*

<a id="sec-civ-1689"></a>
## Cal. Civ. Code § 1689 — Rescission grounds

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1689.

(a) A contract may be rescinded if all the parties thereto consent.

(b) A party to a contract may rescind the contract in the following cases:

(1) If the consent of the party rescinding, or of any party jointly contracting with him, was given by mistake, or obtained through duress, menace, fraud, or undue influence, exercised by or with the connivance of the party as to whom he rescinds, or of any other party to the contract jointly interested with such party.

(2) If the consideration for the obligation of the rescinding party fails, in whole or in part, through the fault of the party as to whom he rescinds.

(3) If the consideration for the obligation of the rescinding party becomes entirely void from any cause.

(4) If the consideration for the obligation of the rescinding party, before it is rendered to him, fails in a material respect from any cause.

(5) If the contract is unlawful for causes which do not appear in its terms or conditions, and the parties are not equally at fault.

(6) If the public interest will be prejudiced by permitting the contract to stand.

(7) Under the circumstances provided for in Sections 39, 1533, 1566, 1785, 1789, 1930 and 2314 of this code, Section 2470 of the Corporations Code, Sections 331, 338, 359, 447, 1904 and 2030 of the Insurance Code or any other statute providing for rescission.

*(Amended by Stats. 1961, Ch. 589.)*

<a id="sec-civ-1691"></a>
## Cal. Civ. Code § 1691 — Rescission procedure

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1691.

Subject to Section 1693, to effect a rescission a party to the contract must, promptly upon discovering the facts which entitle him to rescind if he is free from duress, menace, undue influence or disability and is aware of his right to rescind:

(a) Give notice of rescission to the party as to whom he rescinds; and

(b) Restore to the other party everything of value which he has received from him under the contract or offer to restore the same upon condition that the other party do likewise, unless the latter is unable or positively refuses to do so.

When notice of rescission has not otherwise been given or an offer to restore the benefits received under the contract has not otherwise been made, the service of a pleading in an action or proceeding that seeks relief based on rescission shall be deemed to be such notice or offer or both.

*(Amended by Stats. 1961, Ch. 589.)*

<a id="sec-civ-1692"></a>
## Cal. Civ. Code § 1692 — Restoration on rescission

Source: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1692.

When a contract has been rescinded in whole or in part, any party to the contract may seek relief based upon such rescission by (a) bringing an action to recover any money or thing owing to him by any other party to the contract as a consequence of such rescission or for any other relief to which he may be entitled under the circumstances or (b) asserting such rescission by way of defense or cross-complaint.

If in an action or proceeding a party seeks relief based upon rescission and the court determines that the contract has not been rescinded, the court may grant any party to the action any other relief to which he may be entitled under the circumstances.

A claim for damages is not inconsistent with a claim for relief based upon rescission. The aggrieved party shall be awarded complete relief, including restitution of benefits, if any, conferred by him as a result of the transaction and any consequential damages to which he is entitled; but such relief shall not include duplicate or inconsistent items of recovery.

If in an action or proceeding a party seeks relief based upon rescission, the court may require the party to whom such relief is granted to make any compensation to the other which justice may require and may otherwise in its judgment adjust the equities between the parties.

*(Amended by Stats. 1971, Ch. 244.)*