This document discusses how contracts are formed and some key constraints on an organization's ability to enter into contracts. It defines a contract as an agreement between two or more parties that is recognized by law and enforceable in courts. The five essential elements of forming a contract are: offer, acceptance, consideration, intention to be legally bound, and certainty of terms. It also outlines what does and does not constitute a contract, constraints such as an organization's status and powers, and implied contract terms.