Under California law, a contract is simply an agreement to do or not to do a certain thing.4 It is formed when two or more contracting parties: Agree on the essential terms, and Promise adequate consideration (such as monetary payment or something else of value). To be valid, a contract must have a lawful objective and be entered into by parties who can legally enter into contracts. Parties who cannot legally enter into contracts include minors under age 18 (unless legally emancipated) and people who have been declared incompetent by a court of law.